Dear Marc:
You're right that you probably won't have to collect or pay the tax on a
sale to a reseller, as sales taxes are almost exclusively limited to retail
sales to end users. This is subject to interpretation, however, so you'll have
to check with the department of taxation in the state to be sure. Even if
you're selling to end users, you won't be required to collect or pay sales tax
unless you have a physical presence in the state.
Your partner's presence in Virginia may trigger this for sales in that
state, as what constitutes a physical presence is also open to interpretation.
You normally won't have to register in every state in which you have a
customer as long as you are just doing business through the mail or Internet
or otherwise without having a presence in the state.
Again, you'll have to contact the department of taxation in individual
states to be absolutely sure on this. Many states are acting creatively to
collect some kind of tax on catalog or Internet sales to their residents,
although you can generally avoid it if, again, you don't have a physical
presence.
The usual caveats about getting legal or tax advice only from qualified
professional advisors apply strongly here, as violating sales tax regulations
is a criminal act in some states.
That ought to do it.
Best,
Mark
About the PowerHomeBiz.com Guide:
Mark Henricks, an Austin, Texas, journalist, is the author of "Not Just a
Living: The Complete Guide to Creating a Business That Gives You a Life"
(Perseus Books, August 2002). He can be reached on the Web at