I've been browsing on here for quite a while and I have done a lot of reading both here and elsewhere. Finally decided to register and post :) I'm at the point where I want to start a brand new online business and I am ready to commit to it.. I don't have a day's experience doing this obviously, and I am all ready and willing to create a web site. Before I do that, I need products to sell, and I've found distributors that I'd like to reach out to.
Many of them require a tax ID, etc, and obviously if they had something to look at (such as a web site), I'm sure that would help... How do you get past this hurdle? I can't design a web site without knowing exactly what I'm going to be selling. Should I get a Tax ID number despite not having done anything yet? I read "The Ultimate Guide to Dropshipping" and it does cover this, but it doesn't really go over what to do in this circumstance... or maybe I'm just looking for confirmation. =-/
From what I understand in also being a new seller and also new to e-commerce, a tax ID isn't necessary unless sales reach a certain level of volume or dollar value. It's not even necessary to have one if only a few or a fraction of the places in which orders are going to, charge taxes on online goods. Determining / deciding what to sell is one of the first steps to knowing if certain credentials are required, like a dba or llc. But so far, I haven't encountered the need to register as a dba or a different business designation. It wouldn't hurt to register because it would most likely mean easier tax filing, a certificate that potential suppliers and others can view to confirm it's a legally entitled business, and other things. However, an article I read hinted that it's not necessary for simply having a web site and selling stuff, and especially if it's only dropshipping. Buying wholesale lots and maintaining stock / inventory at an actual location that I would need to obtain and provide upkeep for definitely requires registering as a business entity.
Is the tax ID also known as an EIN? That's what I have learned is not required except for in certain legal / business circumstances. Look for that information to get the answer. I think I need to do the same.
If you're new to dropshipping, I would recommend starting with one of the dropshipping apps on Shopify. There's probably almost a dozen available. Some are free, some are paid. The process of signing up with suppliers individually is going to be a very time consuming process. Not to mention you'll need to download data feeds, format them for Shopify, import them to your store, etc. A lot of the dropshipping apps are one-click and the product is in your store with all relevant information.
If you do still want to work with suppliers individually, you can send them a breakdown of your sales goals for this year and the plans you have to reach those goals. This can serve as a placeholder for your tax ID since your store isn't live yet. Just let suppliers know where your business is currently, where you want it to be, and how you plan to get there with their help. Most will accept you into their dropshipping program even without a tax ID.
I'm currently only importing from dropshipper apps via Shopify integration, and editing data in the admin. I don't need a tax ID as far as I know. Why isn't there clear and concise answers to whether a tax ID is required to do business dropshipping? Even an article by a tax expert doesn't have it. Same with shipping information, it's like dropshipping is a set-up for failure due to information not readily available, or at least links to information which is necessary. It's probably an unintended vetting process.