Join 3,512 readers in helping fund MetaFilter (Hide)


Is it ethical to shop wholesale for my own use?
June 2, 2014 8:53 AM   Subscribe

There's a way I could, legally and within the rules, shop wholesale - even though the purchases wouldn't really be for my business. Do you think this is okay, MeFi?

I happily shop at our local kitchenware store, knowing that their markup pays for convenient retail space and helpful staff. However, my happiness does not extend to their 300% markup on mixer attachments, sheet pans, etc.

I have a business that, although it's not a restaurant, sounds like it could be one. If I were to get a sales tax permit (a/k/a a reseller's permit), I could shop at wholesale restaurant suppliers that don't sell to the public. I would report and pay the sales tax properly, and have confirmed this would be legal and within the rules - just outside of their intent.

My spouse, also a MeFite, believes it would be unfair to circumvent a system designed to be used only by restaurant professionals - unfair to both restauranteurs and the wholesaler. S/he also thinks that it would be unethical to use a reseller's permit for personal gain, purchasing items outside my business' scope.
posted by anonymous to Grab Bag (41 answers total) 3 users marked this as a favorite
 
I don't see any problem with it - the wholesaler is still making a profit, so they won't care in my opinion.
posted by chr at 8:59 AM on June 2 [6 favorites]


I agree with your spouse for what it's worth. I guess I don't really understand what your business is, but I could at most imagine maybe you could use the permit to buy equipment that you actually use for your business, though my instinct is that that would be wrong. I think it's definitely unethical to use the permit for personal gain, full stop.
posted by mlle valentine at 9:00 AM on June 2


Your SO: "That's unethical."
You: "Yeah, but its not illegal."

You're both right!
posted by stinkfoot at 9:01 AM on June 2 [3 favorites]


My spouse, also a MeFite, believes it would be unfair to circumvent a system designed to be used only by restaurant professionals - unfair to both restauranteurs and the wholesaler.

Unfair how? How would the restauranteurs or wholesaler be hurt in such a situation?
posted by dcjd at 9:04 AM on June 2 [10 favorites]


This is no different than buying something on sale. Who "loses" in this transaction, exactly?

I don't apply morals to what a company chooses to price a product at and how I can pay a lower price.
posted by OnTheLastCastle at 9:06 AM on June 2 [19 favorites]


The wholesaler only lets people shop there that are in restaurants because they don't want the general public getting in the way of people who need to get in and out of there. Do it - the quality/price of the products (and general availability of items) in those places is remarkable.
posted by bensherman at 9:08 AM on June 2 [11 favorites]


unfair to both restauranteurs and the wholesaler

I'm not sure how it would be unfair to the wholesaler, as you're paying them their full price, and I'm not sure how it is unfair to restauranteurs as you're not taking anything away from them.

it would be unethical to use a reseller's permit for personal gain

I wouldn't class this as "personal gain". You're using the items yourself, so I guess that's technically a gain, but I'd be more inclined to think it was unethical if you were buying things to sell on at a profit. All you're doing is saving money but I don't see how anyone is losing any.
posted by billiebee at 9:08 AM on June 2 [3 favorites]


I happily shop at our local kitchenware store, knowing that their markup pays for convenient retail space and helpful staff. However, my happiness does not extend to their 300% markup on mixer attachments, sheet pans, etc.

Are you going to avail yourself of the local kitchenware store's convenient retail space and helpful staff to look at and discuss these products before purchasing them through your wholesale supplier? That's the part that is unethical. The rest is fine.
posted by alms at 9:09 AM on June 2 [17 favorites]


I thought that anyone could walk into a restaurant supply store and just buy things. I know when my uncle owned a quick stop and he was gearing up to sell pizzas and subs we took a drive down to the shop somewhere in southern Vermont and I picked up a few little trinkets I thought were neat. It was definitely a wholesalers/ restaurant supplier with nice cheap hard working things and anyone could just wander in and get things.
posted by koolkat at 9:11 AM on June 2 [1 favorite]


I think you need to actually talk to a lawyer, because I'm not sure you should be so blithe that it's totally okay to tell a retailer that you're purchasing for resale and then remit sales tax separately to the government. There's a lot of incentive for the government not to be okay with that, because it makes collection much more difficult on their part. There's a reason sales tax is due to the retailer, not something you just total up yourself. If by "confirmed this is legal" you mean you have actually spoken to an attorney about it, then disregard, but if you just mean "looked up on the internet and it looks okay" then I'd really speak to an attorney about this before trying it. The "proper" way of a taxable sale getting reported is on the sales tax filings of the retailer.

But I have to say I don't really see this as "unfair", no, just as in that realm of "you want to screw around with sales taxes? really? really?" Be absolutely sure you're on the right side of this, and if your state does turn out to be totally okay with it, then by all means.
posted by Sequence at 9:11 AM on June 2 [5 favorites]


Uh. We buy wholesale level stuff all the time, even without a business license.

If you can pay them, and they'll sell to you, and you're paying all your taxes on the stuff you buy, you're ethically pretty sound. No one is losing out here.
posted by furnace.heart at 9:11 AM on June 2 [10 favorites]


To clarify, by "personal gain" I thought you meant to resell. If you're using things just for yourself I wouldn't find it as objectionable.

It seems to me that it's not unfair to the wholesale/restauranteurs but it is unfair to all the rest of the non-restauranteurs who aren't circumventing the system.
posted by mlle valentine at 9:13 AM on June 2


The part that is jumping out to me is that your business is not a restaurant business but sounds like it could be one. If your business had a different name, would you be considering this?
posted by sockermom at 9:13 AM on June 2


You don't list your state, but I would question whether this is actually "legal and entirely within the rules." The state of Texas, for example, says this:
Who does not need a Sales Tax Permit? Persons requesting a sales tax permit solely for the purpose of purchasing items at wholesale prices
I would also make sure that, in the process of filing for a Sales Tax Permit, you do not make any sort of fraudulent statements, like intentionally misclassifying your business as a restaurant.
posted by muddgirl at 9:13 AM on June 2 [2 favorites]


The only downside would be if you have to buy in multiples (like 24 baking sheets, not just one) or if you need an extended warranty on some electrical thing.
posted by Ideefixe at 9:14 AM on June 2


definitely unethical to use the permit for personal gain, full stop.

What, no, this is crazy, the whole point of a reseller's license is for you to exploit the goods you buy for personal gain! Have any of you who think this is unethical ever actually had one of these permits? It just shifts the sales tax burden down the line so that the state isn't double taxing your goods. Neither the state nor the wholesaler cares what you do with them. Just pay your taxes.

The part that is jumping out to me is that your business is not a restaurant business but sounds like it could be one

I promise you the wholesalers do not give a shit what your business is, they just require a reseller's permit so that they don't have to collect sales tax themselves. Your business name could be Totally Not a Restaurant, LLC and they'd happily sell you that mixer attachment.
posted by bradbane at 9:22 AM on June 2 [13 favorites]


mlle valentine : To clarify, by "personal gain" I thought you meant to resell. If you're using things just for yourself I wouldn't find it as objectionable.

It seems to me that it's not unfair to the wholesale/restauranteurs but it is unfair to all the rest of the non-restauranteurs who aren't circumventing the system.


1. How is reselling it for a profit different from operating as a business? That pretty much is the definition of a business. (Presuming taxes are paid)

2. How is this unfair to us? Will you wake up tomorrow one-billionth of a penny poorer, sicker, or any less happy if the OP does this?
posted by IAmBroom at 9:23 AM on June 2 [4 favorites]


Sorry, feel free to disregard what I wrote up above.
posted by mlle valentine at 9:24 AM on June 2 [1 favorite]


I have a legal business. In order to purchase at wholesalers, I had to set up a business account at each one, including my federal employer ID number and copies of my state and local business licenses. Just FYI.
posted by summerstorm at 9:24 AM on June 2 [2 favorites]


As long as you pay whatever tax you need to pay in your state, I see nothing wrong with it. It has also been my experience that some wholesalers don't care if you have a license, as long as you are paying cash, but those are muddier ethical waters indeed. Not advocating, just observing.
posted by ersatzkat at 9:24 AM on June 2


I would also make sure that, in the process of filing for a Sales Tax Permit, you do not make any sort of fraudulent statements, like intentionally misclassifying your business as a restaurant.

This is the thing that I'm unclear on: what do you need to do to get a sales tax/reseller's permit? Would you have to misrepresent the nature of your business in order to do this?

I don't think there is anything wrong with you buying products from a restaurant wholesaler, but I don't think you should - for both ethical and legal reasons - obtain a permit from the state under false pretenses.
posted by breakin' the law at 9:25 AM on June 2 [1 favorite]


The wholesalers don't care well kitchen supply places at least. I walk into our local one all the time and buy stuff, as the quality is so much better for such a good price, no one has ever asked to see any ID or anything and now I have giant sheet pans that could survive direct nuclear strike for only a few bucks each. I do pay taxes so no one's loosing out.

Now if you are trying to buy from the supplier and say you want to sell for resale that's a different kettle of fish and opens a whole legal can of worms.

The only downside is if you have a non commercial mixer you want attachments for you might not find the parts you want supplied. Even if they look the same there are often differences between commercial and general public type machines so something to look out for.
posted by wwax at 9:26 AM on June 2 [1 favorite]


You could buy on behalf of your business, then buy from your business on behalf of yourself (and pay sales tax to do it). Sounds like a pain though.
posted by miyabo at 9:27 AM on June 2


I'm with bradbane; the primary reason the store isn't open to the general public is because they don't want to deal with sales tax. You *should* pay sales tax on this stuff if you are the end purchaser. (In the same way you *should* pay sales tax on stuff you buy online from out-of-state merchants...)
posted by mskyle at 9:31 AM on June 2 [4 favorites]


Costco is a good example of both folks getting what they want. They extend an additional discount to retailers, but regular people can pay the joining fee and pay the stated prices. I assume that retailers agree to a higher threshold of purchases, or something.

I see nothing wrong with this, if you're meeting the requirements of the wholesaler.
posted by Ruthless Bunny at 9:36 AM on June 2


what do you need to do to get a sales tax/reseller's permit? Would you have to misrepresent the nature of your business in order to do this?

When I did this it was literally: type in your name, SSN/EIN, and credit card number for your $10 fee on the county revenue website and here you go, print out this page with your brand new sales tax ID number on it. Paying a parking ticket online requires more steps in my city. If you're worried about "misrepresenting" yourself then just use your personal name - no one cares! The permit is about tax collection, not some magical proof that you are a real business who deserves to get a discount or something.

If your wholesaler actually wanted to keep the public out, they would require a business license (much more involved than getting a reselling permit) and/or they would have high minimums and require you to buy by the case. I mean not all businesses even need a reseller's permit (mine currently doesn't, I don't retail anything) and I still buy from wholesale places.
posted by bradbane at 9:40 AM on June 2 [1 favorite]


This is something people have been doing for years. Centuries, probably. Ever heard someone saying something like "I'd never pay retail"? This is approximately what they mean -- getting things at cost, or at wholesale prices.

If it's unethical, it's unethical at the most minor level possible, like on par with speeding five miles over the limit, or browsing at a bookstore but shopping online.

Conversely, I'm wondering if this is actually worth doing. Firstly, you've got to go to the trouble of getting the proper license to acquire wholesale goods. Then you've got to source wholesale kitchen supplies. Then you have to buy a bunch of durable goods in large wholesale quantities.

Is it really going to be cheaper to buy 10 identical mixer attachments (9 of which you don't need) than it would be to buy one mixer attachment at a 300% markup? Now you've got 9 random mixer attachments you can't use, so what are you going to do, sell them on eBay? And if you do, then you really are running a kitchenware retailing company.

It just sounds like a lot of inconvenience to save a little money on a luxury item that, if you can afford to do this scheme, you can probably afford to just buy at retail.
posted by Sara C. at 9:44 AM on June 2 [1 favorite]


Your wife as a set of personal ethics that makes this unethical from her perspective, possibly along with gaining other advantages that by their nature everyone cannot take advantage of easily. I don't think that makes it inherently wrong, only that some people consider this "cheating".

The resaurant supplier doesn't care where your money comes from. They just don't want to deal with the bureaucratic and logistical headaches of being a retailer.
posted by deanc at 9:56 AM on June 2


Is it really going to be cheaper to buy 10 identical mixer attachments (9 of which you don't need) than it would be to buy one mixer attachment at a 300% markup?.

A couple people have stated that you need to buy like "a pack" of these things to get the wholesale priceā€¦.just for clarification, restaurant supply stores don't work this way. Sometimes a restaurant only needs 1 of something. There are sometimes additional price breaks for buying 10 of something, but no restaurant supply store ever only sells you a 'case' of mixer attachments. You can buy a single sheet pan at a wholesale supply store.

Also, the OP said nothing of reselling anything, just using it for personal use.

I roll into the restaurant supply store (but this is in Oregon, so no sales tax, YMMV, there may indeed be different rules per your jurisdiction) and buy kitchen shit at wholesale pricing all the time. The reason these places are cheaper, and don't have a $300% markup, is that you're not paying for a RETAIL space, which is much more expensive, or a gigantic staff. The best way to release the OP from any (minor) ethical oversteps is just to not window shop at the fancy retail shop. The restaurant supply store is way more fun to go to anyway, and you get to find shit that NO ONE EVER sells for home kitchens. Also, the people who work at a restaurant supply store are way more knowledgable and straight up more fun.

Other examples of how this isn't a big deal:

When it's cider making time, we buy apples direct from the wholesaler, not our grocery store (same apples). This isn't unethical.

When I buy undershirts, I buy a case of them from the factory, then I bundle in a couple other of their items with the shipment (I could buy the same shirts in THEIR stores at retail, but I get a better deal from the factory). This isn't unethical.

When I replaced the burrs in the coffee grinder (that I paid retail for) I contacted the factory direct to get replacements; they're nearly half list price. I ordered a case and got an extra discount on top of that. This isn't unethical.

And from the other side of things: I work in a wholesale coffee roastery, and our clients routinely order their regular order, with a single pound tacked on for their own personal consumption. We don't charge them anything extra for it. They pay their bills. We make money off of it. This isn't unethical, it is in fact encouraged, and we really like it because we're selling more coffee.
posted by furnace.heart at 10:09 AM on June 2 [3 favorites]


Is it unethical to misrepresent yourself by omission for material gain? I would argue that either it is not universally unethical, or it is universally unethical but sometimes justified.

In the absence of a universal rule, we turn to a more utilitarian approach to judge this particular case, while maintaining a bias against misrepresentation for personal gain. What is the benefit? Saving money does not seem to be a compelling enough benefit to take the risk that your misrepresentation might cause harm. To put it another way, if you were lying to get lifesaving medicine, the benefit would be compelling enough for us to ignore what seems likely to be minor or nonexistent harm as a result of your misrepresentation. However, you're misrepresenting yourself in order to get a discount on a recreational good that you could otherwise afford--so even the very small risk of causing harm renders this action unethical.
posted by the young rope-rider at 10:10 AM on June 2 [2 favorites]


What's the likelihood of your business being audited? I'm in Washington state and the department of revenue (which issues reseller's permits) specifically prohibits their use for the purchase of "items for personal or household use". Now, I don't know what their penalties would be, but depending on your location, the legality of this issue does not seem to be so cut and dried.
posted by fryman at 10:12 AM on June 2 [2 favorites]


Not unethical. The only "harm" you're causing is to people charging a high markup.
posted by corb at 10:14 AM on June 2 [1 favorite]


To follow up on my answer, I don't know how you report sales tax, but in WA you have you report sales amounts, and pay state and local off that.

In your case, would your business need to fabricate sales figures in order for you to remit tax on your personal purchases? Again, I don't know the penalties in your location, but it seems like you're opening up your business to unnecessary liabilities in the case of an audit.
posted by fryman at 10:17 AM on June 2 [1 favorite]


just for clarification, restaurant supply stores don't work this way.

Since reseller certificates usually aren't needed to shop at restaurant supply stores, my assumption was that the OP was looking to do what they actually say they are looking to do in their question -- shop with wholesalers, the sort of place that his local kitchen tool boutique is getting their stock from. (OP explicitly mentions his local shop's 300% markup, which seems to explicitly refer to the difference between wholesale prices and retail prices). Which would sell in large quantities, because that's what wholesaling is.

I've shopped at restaurant supply stores before, and while the prices are usually a little cheaper than boutique kitchen supply places, they're not wholesale prices, anyone can shop there, and sales tax is typically added at the point of purchase just like it would be anywhere else.
posted by Sara C. at 10:18 AM on June 2 [3 favorites]


I think you misunderstand sales tax and exemptions. There is only a sales tax exemption on things you resell -- restaurants pay tax on mixer attachments, sheet pans, etc too, so will you in the store. If they'll let you shop there, it's between you and them.
posted by flimflam at 11:07 AM on June 2 [2 favorites]


Can't speak to the legal question, ask your accountant/tax lawyer. But, this seems spot on:

Are you going to avail yourself of the local kitchenware store's convenient retail space and helpful staff to look at and discuss these products before purchasing them through your wholesale supplier? That's the part that is unethical. The rest is fine.

Basically, the wholesale supplier makes money by selling in bulk and not providing a lot of customer service (or at least the kind of customer service a retail store provides). If it's legal in your state, and you don't need consumer level help choosing the right items, then it seems ethical to me. Also, I don't think it's unethical to sell items you don't use. That's what the reseller's permit is for, after all. Perhaps there are some tax or legal hoops to jump through to do that, but if you follow the rules, it seems on the level to me.
posted by bluefly at 11:09 AM on June 2 [1 favorite]


I think some of your premises are wrong. Just show up at the wholesale place with cash and they will almost certainly sell to you. (I specify cash because some places aren't set up to take credit cards and/or require setting up a business account with them to use checks.)

That whole not-open-to-the-public schtick is because they don't want deal with the general public coming in to browse and ask questions.

You won't be skirting sales tax because they have to charge you sales tax on anything not-for-resale anyway and since restaurants aren't reselling their kitchen equipment all their customers are paying sales tax on that stuff. I think the only stuff they sell where sales tax exemptions could plausibly be involved are consumeables like takeout containers.

Source: I have bought stuff from multiple restaurant supply stores in multiple cities over the past 15+ years without a business license or reseller permit and no one has ever objected.
posted by Jacqueline at 11:50 AM on June 2


While I've never owned my own business, I've known many people who have. Whether or not it's ethical, I can tell you that it's common, and that most suppliers don't seem to mind as long as it doesn't get out of hand.
posted by The Underpants Monster at 2:15 PM on June 2


Yeah, no, this isn't unethical. I work (and used to own) a business that bought wholesale. Buy it wholesale under your business name, with no tax, for resale, then sell it to yourself as an individual at the same cost, having put sales tax on THAT transaction.

As long as you're paying and remitting sales tax, there is no victim here. All wholesale channels have a certain amount of this happening. If it's a problem for them, they institute policies such as high minimums or higher prices on small quantities and "special" prices to those wholesale customers who are buying at more typical wholesale quantities.
posted by randomkeystrike at 2:18 PM on June 2 [1 favorite]


Smart &Final in LA sold bulk goods and was open to the public.
posted by brujita at 4:11 PM on June 2


Alms has the sticking point - I would think Amazon reviews can be used as Amazon expects and sets out to capture reviews from non-customers as well to eventually add value to its customer base. But definitely, going to a retail store to use their experience and see the product while not purchasing from them is unethical.

Clothes are a good comparison. Say you want to buy a dress. From Nordsrom retail, you could purchase a dress for $900 but you would never pay that much for a dress. From a wholesaler, you could buy the same dress for $400. In the first case, both the retailer and the wholesaler lost out on your sale. In the second, the wholesaler (and manufacturer further down the chain) made a sale. The retailer never had you as a customer - their price for those items was too high. But they also never lost time and effort in wooing you as a customer.

If it's something you feel strongly the local store deserves to be supported with (like farmers' markets or tiny locally run shops), then you are paying a premium as a moral choice.

But if you weren't willing to buy at their price, but you will at the wholesaler's price, the retail shop is not losing a sale.
posted by viggorlijah at 9:48 PM on June 2


« Older I will be modeling for a cloth...   |  How does the brain's circuitry... Newer »

You are not logged in, either login or create an account to post comments