How to Register for a Sales Tax Permit in Louisiana

Some people can’t handle authority very well and are not suited to work for someone else. Others don’t mind being employees but strive for more. The step to take in such a situation is to start your own business. For some this might seem far-fetched. Some people are scared of venturing into the unknown while others might be excited about taking this step and ready to go. It certainly is a risk, especially if you don’t have a plan set forth on  how to start and grow your business, or if you are missing a very important component: finances.

You have worked throughout your career, learning the tricks of the trade, getting into every aspect of the business you could get access to and doing your best to learn everything there is to know about it. You have equipped yourself with the knowledge needed to run a business. Over the years as an employee, you have had the chance to observe the market dynamics, you know where the supply or demand gaps are, you know what sells and what products are a bust. You have that all in your head as an idea, but you are actually a bit reluctant for a couple of reasons, the lack of funding and one more thing, the legal aspect of registering and running a business.

Cheap and quality supply of goods or the stock you need for manufacturing of a product you intend on producing or selling is certainly a good starting point, but having no financial structure capable of supporting the investment is a stumbling block. In fact, initial funding can be a hurdle for many. Another obstacle is fact that you actually don’t know what it actually takes to legally register and start a business. Staying within the legal framework is as important as all the other aspects in this chain of establishing a business.

But before we look at the legal side of starting a business, with a focus on the state of Louisiana, let us talk about the steps you need to take before even considering the legal portion of the process.

The idea you have in your head, and the knowledge you have acquired over the years, the experience has to be focused and structured, which means you must have a business plan. This will enable you to know how far you have come in the process and what steps to follow. In addition, business plans are a essential for finding external funding.

A business plan can’t be structured without previous research. You start from the idea, but you have to put everything in order, your potential suppliers, carriers, target market, and this is in case you already know what market you’d like to operate in. If you, on the other hand, are not sure what market you are willing to enter, you might want to look into the market conditions a bit more closely. You need to find those aforementioned gaps, niche segments that could enable you to focus on one market segment and slowly gather momentum with your company before eventually growing out of that market and branching out and entering the segments that might be more profitable, but are now accessible to your company because you have the experience, reputation and possibly a workforce and finances to tackle a new market. Even if you are looking to be your own boss and the only employee of the business, this option could be considered the safe route.

You also have to consider the costs of running your business. A good business plan includes a revenue estimate as well as an estimate of expected expenses. These may include office or storage space rent, equipment, office supplies, wages and a lot more. With all that factored in, you have to turn to legal fees as well as licenses and permits you require to run the business in Louisiana, before starting the registration process.

Registering a New Business in Louisiana

Similar to other states, the process of registering a business in the state of Louisiana is done through a number of governing bodies, namely the Secretary of State and the Department of Revenue. To make life easy for registering businesses, the state has created a one-stop website geauxBIZ that allows you to easily create a checklist that will enable you to set up a plan of action, make financial decisions and complete all the legal obligations, among other requirements. The checklist is created specifically for your business after you register and fill in the details about your business. In general, the checklist you will have to go through includes selecting a legal structure for your business, completing a new entity filing with the Commercial Division of the Louisiana Secretary of State, applying for federal and state tax ID. It also includes zoning permits, potentially local, state or federal permits, a sales tax permit and articles of incorporation.

The first item on the checklist is the legal structure of the business. This is an important part of establishing and registering a business as all the forms have their advantages and disadvantages. According to the Louisiana Secretary of State website, you can choose between “sole proprietorship, partnership, corporation, limited liability company and limited liability partnership.”

If you plan on running a small operation from your home with you as the boss and only employee, you can opt for sole proprietorship. This legal business form is an unincorporated business with a single owner. There is no difference between the business profit and the owner’s personal income, which also makes the owner responsible for debts and all other potential liabilities incurred by the business. It is considered the simplest business form to set up and is therefore very popular among small business owners. It can be operated under the name of the owner as a trade name is not necessary.

Partnership, on the other hand, requires a trade name registration and it is a relationship between two more more persons joining in a business. When it comes to forming a corporation, a number of shareholders join in sharing money, property or even both for the capital stock of the corporation. A Limited liability Company can be started and owned by members that can either be individuals, corporations or even other LLCs. There are, however, restrictions when it comes to eligibility to register set up your business as a LLC since banks or insurance companies can’t be LLCs.

Choose your business’ legal structure depending on your preference and the needs of your business. Once you have determined the structure, it is time to start the registration with the Secretary of State. As we mentioned, this can be done online. Following registration at geauxBIZ, you should look to reserve a name for your business, if you are not operating as a sole proprietorship. Name reservation can be done through filling out and mailing a name reservation form after which the name will be reserved for 120 days. Note that registration fees apply. In case you fear someone is already using the trade name you are interested in, you can check the availability by calling the State of Secretary office (contact details provided below) or by accessing the SoS commercial database.

It has to be noted that all business registrations with the Secretary of State require an agent with a physical address in Louisiana, who will be designated to receive legal documents served on the business in case of a legal action. The agent is responsible for forwarding the documentation to the business.

The next step in the chain is registering for a federal tax identification number. This is done through the Internal Revenue Service and can be completed in several forms the easiest being online. For the next step in the registration process, you will have to apply for a Louisiana sales tax number, which we will discuss further in detail below.

Louisiana Sales Tax Permits

The tax portion of the business registration segment is the most complicated one. According to the Louisiana Department of Revenue, “the state general sales tax is payable by users, consumers, lessees, and persons receiving services taxable under the law.” If you are selling merchandise and qualify as a dealer, you have to apply for a sales tax certificate and collect proper taxes from your customers. To qualify as a dealer you have to lease or sell tangible property in Louisiana. This is something other states consider a sales tax nexus, which means a significant presence in the state. This includes services that are taxable under Louisiana law, owning a property for resale, maintain a business location in the state, have a full-time representative in form of an agent or a salesman, or have goods stored in a warehouse or deliver merchandise with a vehicle owned by the seller.

Tax in the state of Louisiana is levied on the sale of tangible property at retail, as well as the use, consumption distribution or storage of such property in the state. Leasing or renting tangible personal property in the state, as well as some of the services, are taxable in the state. These services include furnishing hotel rooms, furbishing of printing or overprinting, the furnishing of telecommunications services and a number of other services.

If you plan on purchasing merchandise for resale, whether in a brick and mortar retail store or online, you should still contact your local authorities as you are required to apply for a sales tax in Louisiana. The registration of a sales tax license is carried out through the Department of Revenue’s geauxBiz.com one-stop website within the process of business registration.The Department of Revenue has created a demonstration video which will go through the steps from registering on the GeauxBiz website, creating a checklist, registering or reserving a name and registering for a sales tax permit. In general, you are required to provide your personal information, business information as well as a description of your business and the NAICS code or the North American Industry Classification System code, which for online sellers is 454110. The sales tax permit application is free of charge, however, it has a set term and you have to renew your sales tax permit within 60 days of the expiration date.

It has to be added that some sales are tax exempt and there are ways to avoid paying tax.

Sales Tax Exemptions in Louisiana

Under the Louisiana law, gross sales of tangible personal property for resale are exempt from sales tax, if the buyer provides a valid exemption certificate indicating that the buyer is purchasing goods for resale. There are a number of other sales tax exempt goods like sales of feed and feed additives for animals used for agricultural or commercial purposes, pharmaceuticals administered to livestock used for agricultural purchases, sales of raw agricultural products and raw agricultural commodities to be utilized in producing crops or animals for market, among other. You can find the full list of sales tax exempt sales here.

To apply for a resale certificate you have to register with Louisiana Department of Revenue’s, Louisiana Taxpayer Access Point. After creating an LaTAP account you will be required to provide account numbers for all business locations, as well as mailing addresses and locations of your business (if you have multiple), your NAICS code, a valid e-mail address as well as the last two years of resale inventory purchase amounts.

So, if you are buying cheap wholesale merchandise for resale online you should apply for a resale certificate and present it to the seller during the purchase. However, if you are selling larger amount of merchandise you are likely to be presented with a resale certificate yourself. In that case, you will have to verify the validity of the certificate. It can be done online at DoR’s Resale Certificate Validation website.

While this guide serves as a pointer to what is necessary to register your business and apply for a sales tax in the state of Louisiana, there might always be some specific local or county requirements that you might have to comply with. This is why we urge you to contact local authorities directly for additional information.

In addition, there are a number of agencies helping entrepreneurs start their small businesses or helping the existing small business owners grow. The Louisiana Small Business Development Center is one such agency that provides this service free of charge. Another agency also providing their consultancy services free of charge is SCORE, previously known as Service Corps of Retired Executives. It is a nonprofit association that aims to help the development of small businesses.

Contact Details

Louisiana Secretary of State
8585 Archives Ave.
Phone: 225.922.2880
Fax: 225.922.2003

geauxBIZ Commercial Division
8585 Archives Ave.
Phone: 225.925.4704
Fax: 225.932.5314

Louisiana Department of Revenue
Baton Rouge Headquarters
Post Office Box 201
Baton Rouge, LA 70821-0201
617 North Third Street
Baton Rouge, LA 70802
Phone: 855.307.3893

LSBDC
Louisiana Emerging Technology Center
340 East Parker Street, Suite 211
Baton Rouge, LA 70803
Tel: 225-615-8932

SCORE Association
1175 Herndon Parkway
Suite 900
Herndon, VA 20170
Phone: 1-800-634-0245
Email: [email protected]

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