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Old 18th July 2006, 03:27 PM   #1

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Default Do E-bay / E-businesses Need a Tax ID Number?

I am a simple ebay/ e-business retailer selling goods purchased at wholesale. I have been trying to seek various distributors and wholesalers. Often times I am asked for a TAX ID number, is it necessary for me to obtain and apply for a TAX ID number when I do have any employees? What are the implications of obtaining a TAX ID number? Is there some sort of loophole for me to skip this step?

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Old 21st August 2006, 11:57 PM   #2

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Generally you need a Fed tax id, if you have employees, and or if you are a corporation, llc or limited partnership. Keep in mind, if you are a sole proprietor, you need to separate yourself from the company for tax purposes - however, you could do your taxes under your social security if you don't have employees.

If I am not mistaken, most wholesalers will only sell to people with a Tax ID number. Perhaps because they need to show the IRS why they did not include VAT on the sales.

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Old 22nd August 2006, 12:27 AM   #3
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As Sintina says, Tax ID can be either your social security number or the ID assigned by IRS to your company, if incorporated. This ID is required by wholesalers only if they are planning to send payments to you. They may pay commisions that need to be reported to the IRS.

If using Social Security as Tax ID, they will generate a 1099 form on your name at the end of the year so you can report these gains on your tax returns.

Another ID they may be referencing to is the Resale Certificate ID, which is the one Sintina is mentioning at the end of the post. I am not sure if this certificate can be issued for Individuals but the purpose is to make you exempt of Sales Tax when the wholesalers sells a product to you. They need this certificate to justify why they did not charge the Sales Tax on your purchase.

I would recomend you to read more about incorporations, get your business incorporated in order to separate you business from your personal gains/expenses and use the liability protection that a corporation may give you.

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Old 27th August 2006, 05:41 PM   #4

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If you're going to hire employees you will need the TAX ID number. You can obtain this via the irs website at irs.gov. It is very simple to fill out. Also, some incorporating companies will do this for you for a small fee. Before you can obtain the tax ID you will need to incorporate your company. Read about that on the various on-line incorporators' websites. They tell you the advantages and disadvantages of the entities, (LLCs, C corp, S-corp). Of course you can give your social security number, but many do not view this as wise in these times of identity theft. The e-business companies I have dealt with all have TAX ID numbers. If you form the company properly, it won't increase the complexity of your tax filing. Some form a single member LLC, and just add a schedule to their own Form 1040 at year end. Check out the online incorporators who will assist you with your tax ID. I use one out of Delaware for my investment properties. It's called Harvard.

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