I had a question around whether I would fall into sales tax nexus in Illinois. I have read through Illinois’ Revenue and tax information(https://www2.illinois.gov/rev/Businesses/Pages/default.aspx) but can’t figure out how it applies in my case.

Some background on the LLC. It was formed in Delaware as a 50/50 partnership. Both I and the other co-founder live in Illinois with the business address just being one of our homes. We don’t have any employees, physical locations or sales. It’s just me and a buddy trying to get something started, we both still work full-time jobs.

What we are trying to do is start our own line of tea. Are plan to promote this tea was to contact office refreshments suppliers to see if they would be willing to take us on and get us into some offices in the area and we also planned to attend some local meetups and events to show the brand and give samples. We would also have an online store to buy tea.

The part we are getting confused on is how sales tax would work. The product is made of up 3 things before it’s ready to sell. We have to buy bags for the tea, the tea itself and labels for the bags all from 3 different online suppliers.

So our question is how would sales tax work if we are selling at a local meetup? How would sales tax work if we are trying to sell to office refreshment suppliers in Illinois as a B2B transaction?

Do we need a certificate of resale? A sales permit? We won’t have a physical location, just on an online store and trying to go to some events to promote it or reach out to other business to stock it. We are having a hard time figuring out which laws apply to us and our scenario and what legal work is needed for those scenarios above. We are being cautious because we don’t want to accidentally do anything wrong or spend more money on form filings that we need to before even selling a single item yet.

Any help would be appreciated

  • As a business owner in IL, you follow the same tax scales everyone else does. – Putvi Apr 2 '19 at 18:02
  • So basically if I want to sell anything even just at some local meetup I need a sales permit? From what I read, sales tax might work differently if it is B2B transaction versus a B2C transaction and that’s what we are trying to figure out. For example, if our online suppliers charge us tax, then we do not have to charge our end user tax since we already paid it? Unless we want to pass along the charge? – Bobby727 Apr 2 '19 at 18:13
  • No, why would you have to charge someone a tax because you were charged a tax? There's different rules for taxes from city to city in IL, but if the tax at the local market is 7% you pay that when you sell there and 7.5% for a store or whatever numbers apply to where you are selling. – Putvi Apr 2 '19 at 18:17
  • If you want to sell B2B, you need to get a copy of their resale certificate and then you can sell to them without collecting taxes (provided they are buying for resale, but that is on them to certify). B2C requires a sales tax permit and requires you to collect sales tax. Online is where it really gets tricky because technically you are required to collect sales tax in each state you make a sale, and pay that to that state, but almost nobody does it (save for larger retailers). – Ron Beyer Apr 2 '19 at 18:48
  • @Ron Beyer thank you for the straight forward answer. So it sounds like if we plan on going to events in Illinois to promote and sell then we will need that sales permit. And buying our supplies from different online suppliers to create a product out of them, would that be considered B2C because we aren’t reselling those invidivual supplies rather combining them into a single product, therefore we would not need our own certificate of resale and would probably have to pay tax on those supplies we buy? – Bobby727 Apr 2 '19 at 19:13

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