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Introduction to Business Tax & Reseller ID's |
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TAX / Reseller Business ID's
Getting started with your wholesale drop ship ecommerce reseller business has some challenges, but getting started with the correct paper work to begin your business and to create accounts with legitimate drop ship distributors is not one of these issues.
Q. What is a federal tax ID number?
A. A federal tax identification number (also know as an employer identification number or EIN), is a number assigned solely to your business by the IRS. Your tax ID number is used to identify your business to several federal agencies responsible for the regulation of business.
Q. How is this number used?
A. In order to do business with a REAL Wholesale Suppler, you will need to supply a "Sales Tax ID number". Some states may have different names for the ID, such as a "Reseller ID", "Tax ID", "Business ID", "EIN", etc., but the reason it is needed is because wholesalers have different tax implications then sellers of retail products and so they do not charge you tax as the reseller they will have to show the IRS they are working with legitimate businesses and those businesses, such as yourself, have charged the tax as part of the retail sales process. Your website or online marketplace is often configured to charge tax to those in the home state for your business as needed. Every state has a web site listing information about the tax rules in that state, and where you can obtain your "Sales Tax ID number".
Q. I was asked to have an EIN, is this the same as a Tax ID?
A. This is just another name for the Tax ID. A federal tax identification number (also know as an employer identification number or EIN), is a number assigned solely to your business by the IRS. Your tax ID number is used to identify your business to several federal agencies responsible for the regulation of business. Any business offering products or services in US that are taxed in any way must get a federal tax ID number. It's safe to say that any business that has employees and/or pays any kind of taxes will need a federal tax ID. An EIN is a nine-digit number (for example, 12-3456789) assigned to sole proprietors, corporations, limited liability companies (LLC), partnerships, estates, trusts and other entities for tax filing, banking, and business purposes. The information you provide through this easy to use website will be used to acquire your ID.
Q. Is it hard to get this ID?
A. No. Getting your state tax ID number is a VERY simple process, and the forms can take just a few minutes to complete. A sole proprietorship will suffice until you become a bigger company when you fill out the paper work. If you need to list the type of business you are going to be you can list yourself as a "retail store" or simply as a "service". Filling out a form, while not exciting, will be one of the easier aspects of setting up an online business and running it successfully. You will need to take time to build a website, cross market products online, and spend time responding to customer questions and marketing your site, so there will be plenty of things to add to your "to-do" list. However, once you are done you will be running your own ecommerce business, and there is no need to view these early steps as a challange when they allow you to start your business easily and correctly to be successful.
Q- How do I get started getting a Tax ID or Reseller ID for my drop ship business?
A- The process can be slightly different from state to state, but all have an online accessible form. The easilst approach is to checkout the information for your state on the Small Business Administration's website or go to the Small Business section of the IRS website. You can view some of these links below:
http://www.sba.gov/
http://www.irs.gov/businesses/small/article/0,,id=98350,00.html
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
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