Reseller or Tax ID, is this needed when dropshipping products?

Hello! I'm interested in starting up a simple dropshipping business, and I see some suppliers requiring a reseller or tax ID. Should I get one of these if I want to start a dropshipping business or is that only for people who buy wholesale?

I live in Vancouver, Canada. Should I be looking for suppliers only from Canada or can I also scout suppliers from other places?

Thanks!

Welcome to SaleHoo, hen_nie03 :)

You are not required to have a resellers or tax ID to purchase from suppliers be it from dropshippers or wholesalers. But having one will mean you get a wide array of supliers to choose from rather than a selected number only since there are supplier (even if they are dropshippers) that will ask for a resellers ID.

As to the location of your suppliers, it would depend really on your preferences and to your needs. Just keep in mind that once you source your items from outside Canada there is a big possibility of being asked to pay additional fees for border duties.

You might find this Link hidden: Login to view helpful.

All the best!

Would this thread be too old to respond now?

Never too old, if it's still available then anyone can respond.

Thanks Marc....I have been taking time to respond to a lot of forum posts here, sharing what I have learnt and known hoping other sellers can learn from it.

@hen_nie03 - As they rightly mentioned, having a reseller certificate / sales tax ID is not a mandate for purchasing goods. But keep in mind that most sellers do not wish to deal with you, if you do not have a reseller certificate / sales tax Id's. Some small sellers/suppliers might, but none of the large suppliers would.

In essence, your sales tax certificate helps you in multiple ways -

a) Establishes you as a serious seller

b) Protects your supplier from any issues from tax audits. If your supplier is from the same state where you do business, he/she is bound to either collect sales tax from you for your purchase or exempt you from paying sales tax on the transaction. To exempt you, they need your sales tax certificate / reseller id in accordance with the law. This would not be significant for small value transactions. For example you buy 1 product for $10 in the state of Texas, then you would be charged 8.25% sales tax which is approximately 83 cents. But when you deal with your supplier and buy larger quantities, it becomes a significant amount.

Say you buy 100 units of this product = $1000. 8.25$ tax on it comes to $82.50. You could rather use this $82.50 towards UPS and shipping cost or be able to buy 8 more units of the same product :)

c) Save yourself sales tax on transactions from the same state because you intend to resell the products. Assuming, you don't resell but use it for personal consumption/use, you would be required to pay USE TAX :)

As my tax professor used to say in India, from birth to death, if there is one thing constant in our life, it is TAX :)