If you are serious about establishing a business on eBay, then you’ll need a federal Tax ID number. Find out why…
What is it?
Your federal tax ID number is a nine-digit number used to identify you to the IRS. This is different from a Sales tax number, which is issued locally.
Who needs it?
All US businesses selling products or services that pay any kind of taxes and/or have employees must have a federal tax ID number (also known as an employer identification number or EIN).
It is advisable for all US eBay sellers to get a Tax ID number, except if you are the sole proprietor of the business. This does not apply to sellers outside the US. In this case you can use your social security number instead. It’s very easy to apply for your Tax ID. It literally takes less than 5 minutes over the phone to the IRS, or you can also apply online through the IRS website. As an eBay seller, there are 5 reasons why a Tax ID is useful to you:
- Tax Breaks:If you run your business from home, you will be eligible for a number of tax breaks. To take advantage of these you will need your tax ID when you file your returns.
- Business account: If you want to open a business bank account, you will need your tax ID as well as the social security numbers of the signatories.
- Employees: Many eBay businesses have employees, often just part-time students taking care of packaging and post. Before you can legally employ anyone, you need a tax ID.
- Open Wholesale accounts: Many US wholesalers will require a Tax ID number before they can do business with you. This is because all retailers in the US are required to collect sales tax from the end user. Without a Tax ID you can’t do this and the wholesaler could face penalties for selling to you. International buyers do not require a tax ID when purchasing from US wholesalers..
- Tradeshows: Tradeshows are a great way of meeting wholesalers, but you will need your Tax ID to register.
