Getting a Tax ID for your dropship business…it’s vital and easy.
In order to do business with a real wholesale distributors, you will need to provide a “Sales Tax ID number” with your application.
“That sounds hard…I don’t have time to figure this out.” If you can’t spend a few minutes to get the tax ID, you are wasting your time trying to launch a drop ship business. Trust us, running a real business (and a drop ship website is very much a real business) will take more than a few minutes of your time. If you cannot devote a few minutes to complete what is the most significant step to starting things right and also one of the easiest steps, then you should really rethink if you are ready to do anything online at all.
There are plenty of sites who will let you sell their products without needing to take a few moments to create this business tax ID. – “That sounds great….I will go with them, because I just want to sell products, not fill in forms.” – Well good luck, because that means you are going to use either a middleman or a scam. You will not have the best prices, fees, shipping costs, etc. Also, since they wont be the real source of the products, they won’t have any clear picture as to what is actually in stock, because they will need to still check with the REAL wholesale supplier first. You also won’t have your name or logo on any of your invoices. In short, working with a middleman or scam will mean you won’t sell products and still are not really in business even if you manage to move a few items, because at this point, you are just buying from a retailer at retail and trying to sell to someone else with an even higher markup.
Now, a tax ID is called different things in different states in the US, but the purpose is the same. REAL Wholesaler Suppliers are not charging you, the drop ship wholesale reseller, any tax on the products they send to your customer. At the end of the year, they have to show the IRS why they did not charge you that tax. Your “Business Sales Tax ID number” proves that you are collecting sales tax on your customers’ purchases for orders shipped to an address in the state where you are based (but check with your state for their current tax rules). Your store or marketplace can automatically be set to calculate and track this tax rate. The Wholesale Supplier keeps a copy of your “Business Sales Tax ID number” on file, so that they are not liable for the tax on the products shipped to your customers.
In the US, each state has a website listing information about the tax rules in that state, and where you can obtain your “Business Sales Tax ID number”. If you are from country different from the supplier you want to use, there might be some additional requirements to complete your application or they might have rules preventing applications from outside their home country, but just review the supplier policies in the Supplier Information section of your Inventory Source account to learn more or find their contact details for more questions.
You can easily find these details on your own….but to make it even easier, we have compiled a list of the current details for each state. You can click on your state below to go to that site, and get the information you need. It could not be any easier to get started right. Again, getting the ID will be the most important step as you begin your new dropship business.