The Importance of a Tax ID Number
In order to do business with real wholesalers you will need to have a 'Sales Tax ID Number’, ‘Resale Certificate’, or a 'Sales and Use Tax ID' all of which are the same thing, just called different names.
Wholesalers do not charge sales tax, so as an online retailer you’re responsible for collecting the sales tax from you customers who purchase products from you and paying the sales tax to the government.
In order to collect taxes from your customers, you will need a 'Sales and Use Tax ID Number'
Although the mere thought of acquiring a ‘Sales Use Tax ID Number’, can be somewhat intimidating for some people, it shouldn’t be. If selling physical goods on the internet is something you’d like to do to supplement or even replace your existing income, than you can hardy afford to let a little paperwork stop you from experiencing the benefits of being a legally recognized business.
If you wish to purchase your inventory from real wholesale suppliers and get the best rock bottom prices on the products you want to sell, you must be an official, legal business.
Therefore registering for your ‘Sales and Use Tax ID Number’ should not be a daunting task. All you have to do is contact your State IRS office - not Federal - and apply for a 'Sales and Use Tax ID' or 'Resale Certificate'. This is what 'real wholesalers' will need from you in order to do business with you. They will use this to show that they don't have to charge you sales tax on the products you purchase and resell to your customers.
The cost of a 'Sales and Use Tax ID' or 'Resale Certificate' is different in each state.
Once you've applied and paid the fee, most states will email you a number right away and then mail you a hard copy of the document containing your number.
Although some wholesalers will simply have you print your number in their 'wholesaler application', others will require you to fax or mail them a copy of the document your state mails to you. So be sure to keep your 'Sales and Use Tax ID' document in a safe place where you can get to it when needed.
The collecting sales tax rule goes like this for online businesses: you only collect tax on the products shipped to addresses that are in the same state where your business resides. If you live in Atlanta and someone purchases an item from you and has it shipped to an Atlanta address, you would charge that person tax on that item. The tax amount is different in each state so check with your state to find out how much you are suppose to charge.
Some wholesalers may require you to also collect tax from any of your customers who purchase products from you and live in the same state that the wholesalers company resides. You should always be sure to check the laws of your state and any rules the wholesaler you're doing business with has about collecting taxes.
If your wholesaler is charging you tax on items because your customer lives where your wholesalers company is, you will want to be sure and charge that tax to any of your customers that live in that area. Other wish you will be responsible for paying these taxes because your wholesaler is going to add them in the cost of the product.
Each state has its own web site with information explaining their tax rules and how you can apply for a 'Sales and Use Tax ID Number’.
Below you will find links to the state tax information page of your state. When last checked these links were working and were correct. If they are no longer working just 'Google' your states name with the words 'Business Sales and Use Tax ID Number', such as 'Florida business sales and use tax ID number' or 'California Sales and Use Tax ID Number'.
If you have any questions about a 'Business Sales and Use Tax ID', contact information should be on the website that you wish to file for a business tax ID.
Becoming a legal business is not hard to do and the benefits far out weigh the paper work involve tremendously.
Tax ID Informational Website for each State
Alabama | Alaska | Arizona | Arkansas
California | Colorado | Connecticut | Delaware
D.C. | Florida | Georgia | Hawaii | Idaho | Illinois Indiana | Iowa |Kansas | Kentucky | Louisiana
Maine | Maryland | Massachusetts | Michigan
Minnesota | Mississippi | Missouri | Montana
Nebraska | Nevada | New Hampshire | New Jersey
New Mexico | New York | North Carolina | North Dakota | Ohio |Oklahoma | Oregon | Pennsylvania
Rhode Island | South Carolina | South Dakota
Tennessee | Texas | Utah | Vermont | Virginia
Washington | West Virginia | Wisconsin | Wyoming
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