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To Resell or not to Resell, is there a difference?

detroitnetworkgeardetroitnetworkgear subscriber Posts: 1
edited January 2009 in Business Planning
Hello,
I have recently created an LLC in Michigan to develop a product.  The product revolves around some software that was written using open source software.  The software needs a computer to run on though, so that would also be included in the product.
My question is, if I am buying a computer from a distributor, and then will be reselling that computer at a value added price with the addition of my software, do I need to anything to make the process more legit?  Do I have to "register as a reseller"?  I assume I will have to register for State sales tax.  Do you charge sales tax for software, and if I am selling to mostly tax exempt companies, do I just eat the sales tax I am paying the distributor?
Thanks in advance!

Comments

  • detroitnetworkgeardetroitnetworkgear subscriber Posts: 1
    Gotcha.  Thank you very much for the explanation!
  • robertjrobertj subscriber Posts: 0 Member
    detroit,
     
    I`m not sure about Michigan, but in most States the sales tax process is:
     
    You get a "sales tax" license from the State. When you purchase materials for "resale" you give your license number to the seller. That makes the transaction "exempt" from sales tax.  When you resell the material (whether alone or as part of something else) you charge sales tax on the total transaction.  You would then forward that tax on to the State of Michigan.
     
    As to the computer specifically - since you will not be selling it as part of your total package- consider the issue of warranty and support for the computer. You might want to try to have a "reseller Agreement" - with some supplier where they provide the support.  [ie - if you purchase an HP computer at Circuit City - the support is supplied by HP]
     
    Good luck
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