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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 109966
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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is it 100% legal to buy merchandise from outlet stores (as

Customer Question

is it 100% legal to buy merchandise from outlet stores (as an individual, not a business), and then sell that merchandise in a boutique-type store?

How does this work with taxes (buying merchandise as a business usually is tax-free)?

Do I have to incur the cost of tax because I am purchasing the merchandise as an "end user" (even though the intent is not for personal use)?

What is the difference (if any) between this method and the traditional way stores engage in merchandising (direct relationships with manufacturers, a.s.o.).

Are there any permits or licenses that I need to acquire in order to legally sell those products in my own boutique?

Any other guidelines or references would be great! thanks.
Submitted: 6 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 6 years ago.
You can buy merchandise from an outlet store and there is a right to resell. You would have to charge sales tax on the sales when you sell them. You would need to be an incorporated business (LLC or Corporation) and you would need to obtain a Tax ID from the IRS and then you would have to file your sales taxes with the NY Department of Revenue for all of your sales. If you buy wholesale like most stores do, then you do not pay sales tax on your purchases outside of the state (but you would pay sales tax on any purchases made within NY) and then when you sell the merchandise you would also charge sales tax on the sales and pay those taxes to the DOR.

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Customer: replied 6 years ago.
too generic, did not answer my particular questions specifically.
Expert:  Law Educator, Esq. replied 6 years ago.
What do you need to know more specifically? If you would ask specific questions on what more you need to know I would be happy to assist you further. You asked a very broad question, so unless I know what you do not know and need more information on I would simply be guessing.

1) Yes, it is legal to buy from an outlet store and then sell the merchandise elsewhere under the legal right to resell.

2) You pay sales tax when purchasing from the outlet store and when you sell the merchandise you charge sales tax to the buyer and you file your sales taxes with the Department of Revenue.

3) Yes you have to pay the sales tax and then you charge sales tax to the buyer as well. Merchants figure in the cost of the tax when pricing items for resale.

4) The only difference in this method and the traditional method stores use in buying from the manufacture is that the traditional method allows the buyer to buy in bulk and at a wholesale price. The store still pays sales tax and shipping for the items. These sales tax and shipping costs are calculated into the price when the merchant prices for sale.

5) If you are going to have a store, NY does require business licenses in NYC, but other than that you should be an incorporated entity, such as a corporation or LLC and would need a tax id in the name of the corporation to use to file taxes. The LLC is usually the best entity for a smaller business because the taxation for profits is passed onto the members and they claim profits on their personal taxes and the LLC pays no income tax only sales taxes.

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