Wholesale Dropship Business Permit Basics
I’m going to try to help you solve the problem of whether or not you need a business license or business permit to do buy wholesale products and then dropship them or sell them by some other means.
There seems to be a great deal of confusion over the subject area of wholesale, dropshipping, business permits, and sales tax permits. One question that is asked again and again is “Do I need a business license to buy wholesale?”
Let’s cut to the chase. In order to buy wholesale products, you must have a sales tax permit. Sometimes this is referred to as a resale certificate. A true wholesale company is required by law to demand proof of your sales tax permit. The sales tax permit is what allows you to buy wholesale goods without paying sales tax. You get your tax permit from the State, and a place to start is with your state’s Department of Treasury, or you could try the Office of the Attorney General, as well.
Do you need a business license or business permit? Generally, to resell, or retail goods either from a shop or by ecommerce, you do not. The most basic sort of business is a sole proprietorship. If you choose to run your business as a sole proprietorship, your Socail Security number is your tax ID, and you declare your taxes as an individual. That’s it.
Do you need an EIN? Check with the IRS to review the rules. They are not complicated, so don’t be intimidated. However, if you are setting up business as a sole proprietorship, you do not need an EIN unless you expect to be paying an employee a salary.
Is a sole proprietorship the best form of business for you? Consult an attorney knowledgable in business law. This is very important advice. If you serious about starting a business, consult an attorney or perhaps an experienced and successful business person to help figure out what is best for you. If you are just testing the waters with a tiny dropshipping micro business, you’ll probably do just fine beginning as a sole proprietorship.
Generally, what I’ve found on the Internet advice circles is that you are advised to incorporate as a limited liability corporation (LLC). This is an inexpensive, not terribly complicated means of incorporating and offers some advantages where issues of liability are concerned. However, the advice to do this is given in a knee jerk, one size fits all fashion. To really know what is best for you, you need to consult an intelligent, honest attorney. Not everyone faces the same needs and/or liability issues, and to know what sort of business structure you are likely to need, it helps to consult a professional.
So, take away 3 main points:
- sales tax permit
- sole proprietorship
- consult an attorney regarding business structure
Now, to help you along with your wholesale, dropshipper, and liquidation and closeout supply sources, we suggest taking a video tour of the salehoo online wholesale directory and forum. We are members, and feel this is reliable source of product distribution information. In addition, there is an active forum, and that may very well be valuable than the list of product suppliers.
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