W9 vs Resale Certificate: What's the Difference?
Business owners are often confused when asked for both a W-9 form and a resale certificate. While both are tax-related documents, they serve completely different purposes and are required by different types of organizations.
This guide breaks down the differences, when to use each, and why you might need both.
Quick Answer: The Key Difference
| Document | Purpose | Who Issues It | What It's For |
|---|---|---|---|
| W-9 | Reports your taxpayer ID | IRS (Federal) | Income reporting for 1099 forms |
| Resale Certificate | Proves tax-exempt purchase | State tax agency | Sales tax exemption on resale inventory |
Bottom line: W-9 is about income tax (what you earn). Resale certificate is about sales tax (what you buy for resale).
What Is a W-9 Form?
Form W-9 (Request for Taxpayer Identification Number and Certification) is an IRS form that provides your tax identification information to businesses that pay you.
When You're Asked for a W-9
Companies request W-9 forms when they need to report payments to the IRS:
Common scenarios:
- You're a contractor or freelancer
- You're a vendor or supplier getting paid
- You're earning rent, royalties, or other income
- You receive prizes or awards worth over $6$600
What Information Is on a W-9?
A W-9 includes:
- Your name (or business name)
- Business entity type (sole proprietor, LLC, corporation, etc.)
- Your address
- Taxpayer Identification Number:
- Social Security Number (SSN) for individuals
- Employer Identification Number (EIN) for businesses
Why Companies Need Your W-9
If a company pays you $6$600 or more in a calendar year, they must:
- Report the payment to the IRS on Form 1099-NEC (or 1099-MISC)
- Send you a copy for your tax records
Your W-9 gives them the information needed to file that 1099.
Important: W-9 forms stay on file with the paying company. They don't get filed with the IRS—only the 1099 form does.
W-9 and Sales Tax
W-9 has nothing to do with sales tax. It doesn't:
- Exempt you from sales tax
- Allow tax-free purchases
- Replace a resale certificate
It only provides your tax ID for income reporting.
What Is a Resale Certificate?
A resale certificate (also called a reseller permit, sales tax exemption certificate, or resale license) is a state-issued document that allows you to purchase goods without paying sales tax when you intend to resell them.
When You Use a Resale Certificate
You provide a resale certificate when:
- Buying inventory to resell
- Purchasing materials that become part of products you sell
- Buying items for lease/rental to customers
Key requirement: You must be a registered retailer with sales tax collection authority.
How Resale Certificates Work
The Process:
- You register for a sales tax permit with your state
- Your state gives you a seller's permit number
- You complete a resale certificate with that number
- You provide the certificate to suppliers
- Suppliers don't charge you sales tax on resale inventory
The Trade-Off: Instead of paying tax when you buy, you collect tax from your customer when you sell.
What's on a Resale Certificate?
Resale certificates typically include:
- Your business name and address
- Your state sales tax permit number
- Description of business type
- Statement that purchases are for resale
- Signature and date
Format varies by state - each state has its own form.
Resale Certificates and Income
Resale certificates have nothing to do with income reporting. They don't:
- Replace a W-9
- Report income to the IRS
- Relate to 1099 forms
They only exempt you from sales tax on purchases for resale.
When to Use Each Form
Scenarios Requiring Only W-9
Freelancer/Contractor:
- You design websites
- Client pays you $5,$6000
- Need: W-9 (so client can issue 1099 for your income)
- Don't need: Resale certificate (you're not reselling goods)
Property Owner:
- You rent out commercial space
- Tenant pays $2,$6000/month rent
- Need: W-9 (tenant may issue 1099-MISC for rent paid)
- Don't need: Resale certificate (rent isn't a taxable good)
Scenarios Requiring Only Resale Certificate
Retailer Buying Inventory:
- You own a clothing boutique
- Buying $10,$6000 of shirts from wholesaler
- Need: Resale certificate (to buy tax-free for resale)
- Don't need: W-9 (you're the buyer, not receiving payment)
Amazon FBA Seller:
- Purchasing products from manufacturer
- Products will be sold on Amazon
- Need: Resale certificate (buying inventory)
- Don't need: W-9 (you're purchasing, not being paid)
Scenarios Requiring BOTH
Dropshipping Supplier:
- You operate a dropshipping business
- Working with a supplier who ships direct to customers
- Supplier needs to report payments to you
You need:
- Resale certificate - to buy products tax-free
- W-9 - so supplier can report payments if they exceed $6$600
Wholesale Distributor:
- You buy from manufacturers
- Sell to retailers
- Have both vendor and customer relationships
You need:
- Resale certificate - when buying from manufacturers
- W-9 - to give to retailers who pay you (if over $6$600)
Key Differences Summary
Purpose
- W-9: Identify you for income tax reporting
- Resale Certificate: Exempt purchases from sales tax
Who Issues
- W-9: Federal form (IRS)
- Resale Certificate: State tax agency
Who You Give It To
- W-9: Companies that pay you
- Resale Certificate: Companies you buy from
What It Does
- W-9: Enables 1099 reporting of your income
- Resale Certificate: Proves you're buying for resale, not consumption
What Tax It Relates To
- W-9: Income tax (federal)
- Resale Certificate: Sales tax (state)
When It Expires
- W-9: Doesn't expire (update when info changes)
- Resale Certificate: Some states require renewal every 1-3 years
Common Misconceptions
- Myth: "I have a W-9, so I don't need to pay sales tax" - Reality: W-9 only relates to income reporting. It has no effect on sales tax.
- Myth: "A resale certificate means I don't need to file 1099s" - Reality: If you pay vendors $6$600+, you still need their W-9 to file 1099s regardless of resale certificates.
- Myth: "I can use a resale certificate for business supplies" - Reality: Resale certificates only cover items you'll resell. Office supplies, equipment, and supplies you'll use yourself are taxable.
- Myth: "W-9 and EIN are the same thing" - Reality: EIN is your business tax ID number. W-9 is the form where you provide your EIN (or SSN).
Do You Need Both?
Ask yourself:
Am I buying products to resell?
-
- Yes - Get a resale certificate
-
- No - You don't need one
Am I receiving payments of $6$600+ from businesses?
-
- Yes - Provide W-9 to those paying you
-
- No - W-9 probably not needed
Many businesses need both because they:
- Buy inventory (need resale certificate)
- Receive payments from customers (need to provide W-9)
Get Your Resale Certificate
If you're buying inventory for resale, you need a resale certificate from your state. The process involves:
- Registering for a sales tax permit
- Receiving your permit number
- Completing resale certificate forms
- Providing certificates to suppliers
We make it easy. Start your resale certificate application and have your certificate in hand within 24-48 hours. Join thousands of resellers who trust ResaleCertificate.org for fast, accurate registration.
Remember: W-9 is for income you receive. Resale certificate is for inventory you buy. Both are important, both are required in different situations, and neither replaces the other.