How to Get a Resale Certificate in Arkansas

If you’re registered to collect sales tax in Arkansas, you can save on sales tax by using an Arkansas Resale Certificate, known as an exemption certificate within the state. This certificate allows you to purchase qualifying goods intended for resale tax-free, then collect sales tax when you resell those goods.

Used correctly, an exemption certificate can protect your cash flow from unnecessary spending while keeping your business in line with Arkansas laws.

What is a Resale Certificate?

A resale certificate is used to allow businesses that sell tangible goods to purchase those goods from wholesale vendors without paying tax. Like many states, however, Arkansas doesn’t use an actual resale certificate.

Arkansas’s Exemption Certificate, or Form ST391, is used to waive sales tax when restocking goods that you sell to your customers. Rather than paying tax to the supplier, you’ll collect it from your customer at the time of sale.

Arkansas Code § 26-52-517 outlines the rules, liabilities, and obligations for resellers (that’s you) and the vendors through whom they purchase their retail goods.

Is the Arkansas Exemption Certificate the same as the resale certificate?

In Arkansas, an exemption certificate serves as your resale certificate to waive taxes when purchasing goods destined for resale. Most states have an equivalent form, and each state uses different names to describe the same document. Some states even use separate forms for purchasing and selling retail goods. Arkansas keeps things simple with one exemption certificate to rule them all.

What businesses use a resale certificate in Arkansas?

If your business purchases goods or materials to manufacture or produce goods, which it then sells, you might benefit from using Arkansas’s equivalent of a resale certificate, the exemption certificate.

Some examples of when to use the Arkansas Exemption Certificate include:

• Purchasing guitars from a local luthier to sell in a small music store
• Buying raw lumber to build dressers or cabinets for remodeling clients
• Acquiring bulk graphics processors to install in pre-built gaming PCs

Still, if in doubt, it’s always best to reach out directly to Arkansas’s Department of Finance and Administration to confirm whether a purchase qualifies for sales tax exemption.

Finding yourself with more questions than answers is a common occurrence when you’re building a business. We want to minimize the amount of time you spend without the support of an expert. Hire us to form your business, and we’ll guide you every step of the way and point you in the right direction if you get turned around.

Steps to Use Your Arkansas Exemption Certificate

Once you’ve formed your Arkansas business, the state recognizes you as a legal entity doing business in its jurisdiction. That’s a great start, but you’re not ready to begin selling any goods yet. Arkansas’s Department of Finance and Administration is the big boss in Little Rock when it comes to personal and business taxes, and you’ll need to register with them to really get going as a reseller.

Step One: Register for an Arkansas Sales Tax Permit

To start selling in Arkansas, you’ll need to be registered to collect and remit sales tax for products and services you sell. Your first step is registering for a tax account on the Arkansas Taxpayer Access Point.

As you prepare to register, you should come prepared with:

• Your EIN, or Federal Employer Identification Number
• Your North American Industry Classification System (NAICS) code or codes
• Names, addresses, emails, phone numbers, and Social Security Numbers for each LLC member or corporate officer
• Bank account details to pay the $50 sales tax permit fee electronically
• The business’s physical and mailing address
• The date your business operations will begin

Additionally, you might need to provide a lease agreement if you’re leasing a building to run your business out of, and a bill of sale if your inventory was purchased from another company.

If you’ve never sold goods before, it’s a good idea to get familiar with the typical sales tax rates in Arkansas before you actually start collecting on sales.

Step Two: Fill out your Exemption Certificate (Form ST391)

Arkansas’s Exemption Certificate, Form ST391, is a relatively straightforward document. You’ll download a blank form directly from the Department of Finance and Administration website, and fill it out whenever you make tax-exempt purchases of goods that you intend to sell from wholesale vendors. The full instructions for filling out form ST391 can be found online, but the information you’ll need to provide includes:

• Your Arkansas Sales/Use Tax Permit number, or
• The permit or certificate number for another state’s equivalent document, if your business is formed outside of Arkansas
• The name of the vendor you’re buying from
• A description of the items you’re purchasing
• The reason you’re claiming tax exemption on this purchase
• Your business’s primary activity
• Your business name and contact information
• A signature and date on behalf of the business
• Your title or position in the business

If you’ve registered any Arkansas doing business as (DBA) names, and you’re operating under one of those when you make your restock purchase, you may need to list them on your exemption certificate as well. If you’re not sure what that is, check out this nifty DBA name guide.

Step Three: Provide the Form to Suppliers

Upon making your tax-exempt purchase, you’ll provide a completed copy of your Arkansas Exemption Certificate to the vendor you’re buying from. You’re also required to keep a copy to provide the state with a paper trail on any tax-exempt goods you buy, and to ensure they know where the final sales tax comes from.

Suppliers keep their copy to show the state why they did not collect sales tax from your purchase. In the end, though, your business is on the hook for sales tax if you use the goods you purchased for anything besides selling, so make sure your documentation is sound.

Saving on Taxes in Arkansas

Using your Arkansas Exemption Certificate can save your business money and speed up your growth as a reseller, but only if you follow the rules and stay compliant. Make good with the Department of Finance and Administration, keep clear records, and avoid tax audits by preparing adequately and knowing the rules before you have the chance to break them.