Wholesale & Distribution Bookkeeping in Texas

A wholesale sale in Texas is exempt because you hold a valid resale certificate for that buyer, not because the buyer said they were a reseller. The Texas Comptroller of Public Accounts looks at the certificate file, and a sale with no certificate behind it is treated as a taxable retail sale with the tax coming out of your margin rather than the customer's pocket. Remote sellers may elect a single local use tax rate instead of tracking every jurisdiction. The franchise tax is a separate annual filing. Certificates expire, businesses change entities, and a file that was complete three years ago is not complete now — which makes reviewing it a scheduled task rather than something done when a letter arrives.

Drop shipping puts three parties in three possible states on a single transaction, and Texas has to decide whether the supplier shipping into it owes tax, whether your resale certificate from another state is acceptable here, and whether you have an obligation of your own. Texas sets economic nexus at $500,000 in sales, which is the threshold that decides whether the last question is even live. The books make this answerable by recording where goods actually shipped rather than only who was billed — a distinction most order systems capture and most bookkeeping ignores.

Economic nexus in Texas is $500,000 in sales. For wholesale and distribution, that threshold is the one to watch, because it is reached by selling into the state — no office, no staff, no physical presence required. Once you cross it you are expected to register with the Texas Comptroller of Public Accounts and begin collecting. We track your Texas sales against it and tell you before you cross, not after.

Texas assigns filing frequency by liability — monthly, quarterly, or annually by liability. Because Texas includes an annual bracket, a low-volume seller here can go a full year between filings, which is exactly when a liability account drifts unnoticed. We reconcile it monthly regardless of when the return is due.