We recently had a client ask us what was required to become a reseller in Illinois and we figured why not take that information and make it a little more relatable to all of our awesome retail readers!
First, let us start with making it clear what, exactly, a reseller is. A reseller is a company or owner that purchases wholesale merchandise and “resells” it through other outlets, whether that is online or in a more traditional retail environment.
There are any number of variances in reseller store setups, products sold and reasons why you may want to become a reseller. Maybe you want to supplement existing services you offer with related products. Perhaps you have an “in” on a good source or manufacturer for new merchandise that you are confident will sell well. Whatever your reason, here are a few good things to know if you wish to become a reseller in Illinois:
First, establish a solid business plan and make sure you are aware of the market trends. (This is a blog for another day, but, your plan should at the very least include an executive summary, a budget and financial projections –contact us for help!-, and a marketing strategy). Next, reach out to your seller or manufacturer to apply to be a retailer or stockist for their product. Then, come to an agreement of how you will be compensated for your business.
There are two different compensation models you are likely to choose from:
- Buy Rate Model: You purchase the merchandise, then resell it at an appropriate market price for profit; and
- Percentage Model: You have an agreement with the manufacturer to sell the product at a designated price and then you are paid a percentage for each unit sold.
You will have to determine with the seller what model you will use, but make sure you know the conditions of your agreement and compensation in detail before signing anything. Better yet, have a lawyer look over your Terms & Conditions.
Now for the “fun” stuff.
In order to become an business that is authorized to purchase merchandise that is exempt from tax, you will need to obtain either a retailer account ID number or a reseller resale number. Once you have obtained your number, you will need to complete the State of Illinois Form CRT-61 Certificate of Resale.
If you are not already a registered business you will need to fill out a certificate of registration or business authorization allowing you to do business in the State of Illinois. The certificate of registration, which you must display in your workplace, is the legal authorization to perform business. You can find out more about applying to register your business here.