One generally-requested question by prospective dropshipping retailers is “Will I require an EIN to begin dropshipping”? Just like many tax-related questions, the solution could be a little bit complicated, but here’s the fast and dirty version:
Most dropshippers have no need for an EIN to function. However, it’s wise to obtain one anyway.
Regardless of whether you require an EIN to dropship depends upon your company type
A Company Identification Number, or EIN, is comparable to a ssn for the business. If you are beginning your dropshipping business alone, you are beginning a kind of business referred to as a ‘sole proprietorship’. Sole proprietorships don’t technically require an EIN to be able to operate – rather of having to pay separate business taxes (which require an EIN), you’ll pay taxes in your personal taxes according to your profits.
Since sole proprietorships are probably the most common dropshipping business design, most dropshipping companies aren’t legally needed with an EIN to be able to operate. However, in case your dropshipping clients are a partnership, LLC, or corporation, you’ll need an EIN.
Even when you are operating your dropshipping business alone, will still be makes sense to obtain an EIN for many reasons:
The advantages of an EIN for dropshippers
- Many dropshipping providers and wholesalers will request your EIN when you are ordering products.
- Most of the permits and licenses you have to operate your company legally will need you to provide your EIN when completing the forms.
- If you wish to generate a separate banking account for the business (often a good idea), you’ll most likely require an EIN to spread out a company account.
- As the business grows, you’ll eventually become needed to obtain an EIN anyway.
- You will need an EIN should you ever wish to hire employees.
- If you are dropshipping over Amazon . com FBA, the chances are you will need an EIN for tax purposes.
- It will help safeguard you from identity and tax thievery.
Ways to get an EIN for the dropshipping store
Subscribing to an EIN is simple, free, and could be done entirely online. Go to the IRS website and submit an application for the EIN. It takes approximately fifteen minutes, and you will get an EIN which you can use immediately. All you will need to complete the application is really a reputation for your company (we advise selecting a reputation by having an available domain), a ssn or Truncated Citizen Identification Number (TTIN), and a few fundamental details about yourself just like your address and name.
If you are intending to begin a dropshipping business, make certain to obtain an EIN fairly early along the way. Through an EIN takes only a couple of minutes, and could save you considerable time and trouble later. For additional help beginning your personal dropshipping store, take a look at our beginner’s help guide to dropshipping or our help guide to high-ticket dropshipping.
Happy selling!
Have questions or comments about through an EIN for the dropshipping business? Make use of the comments section below!