Hi CutieAcessory,
I'll do my best to answer your questions in the least complicated way as possible. :) I'll be providing links for you to read more (when you are ready) for each topic.
It is not required for one to be a USA resident nor to be a USA citizen to establish a business in the USA. Have a read on the following articles -
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You can resell merchandise as an individual (a sole proprietor is someone who owns an unincorporated business by himself or herself) or as a company, but you basically need to register your business first. :)
When starting a business, you must decide what form of business entity or business structure to establish - (sole proprietorship, general partnership, limited partnership, C corporation, S corporation, limited liability corporation).
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And from the SaleHoo New User Manual, you will learn that -
Most people starting a business begin a sole proprietor because it’s the cheapest and easiest way to structure a new business. If you choose this option, you should register a trading name or DBA because it gives you some liability protection and looks more professional. This can be done very easily at your local county clerk’s office and usually costs less than $30.
Alternatively, you can consider incorporating your business. This is a more expensive and complex option, but it also gives your reseller application an instant credibility boost as far as suppliers are concerned. To incorporate, you’ll be looking at paying anywhere from $500 to $900 depending on where you live, and ideally you should consult a lawyer.
With the business structure in place, you will then encounter these two terms –
1. Your federal tax id number (EIN) – which is for federal tax purposes, issued by the IRS.
Any person (or entity) that files taxes needs an identification number of some kind. It's how the IRS tracks who's paying what to where and when. For people who are employed by someone else, their Social Security number is used (this can also apply to people who, in addition to being employed by another company or person, also run a small business from home).
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2. Your state reseller license – which is issued by your state and is for state tax, reporting and documentation purposes.
If you are a US citizen purchasing wholesale goods from a wholesaler within the US, then you will probably need a resale certificate or license from the state in which your business is located.
A resale certificate or license enables you to purchase goods wholesale without paying sales tax. It also allows you to collect sales tax from your customers, the end consumer.
Without a resale certificate you will have to pay sales tax on the goods you buy wholesale and then also charge sales tax. In this case you can add the sales tax you paid as a deduction on your return, but it is much less complicated to just present your reseller license when you buy.
Most wholesalers will ask to see a sales tax ID or reseller's license before they will sell you the goods. This is because they are legally obliged to check whether you are able to collect sales tax from the end user.
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Please note that these two are not interchangeable. :)
Sales tax is only charged if the supplier has a physical location in the state to where the drop ship order is being delivered. In this case, the sales tax will be passed along to the (your) customer that has purchased the product (not to you, the reseller). Sales tax is reported by the product suppliers and you are not responsible for reporting sales tax through the drop shipping method. You are responsible however, for reporting income.
eBay will not be requiring you to become a company before you can sell in their platform. As mentioned, with drop shipping you will be responsible for reporting your income and declaring your eBay selling profits and expenses when filing your taxes. If you are in a situation when you need to collect sales taxes at eBay, you can follow the instructions how to collect sales tax at eBay from this link
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I know this sounds a lot to digest, but I hope it makes things a lot more clear for you at this point. :)
And do not hesitate to ask us more questions whenever you need to.
All the best!
