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Sales Tax ID FAQ

Sales Tax ID FAQ

  Please choose from one of the topics below:


#1 Q: Do I need a Tax ID to work with SMITH DISTRIBUTORS?

A: Yes! To work with SMITH DISTRIBUTORS, you need a tax ID. The tax ID is called a Sales & Use tax ID in most states. It can also be called a Seller's Permit or Reseller Certificate. Check with your State's Department of Revenue!

#2 Q: Do I need a Tax ID to work with SMITH DISTRIBUTORS if I’m only planning to sell on eBay or Amazon?

A: Yes! To work with SMITH DISTRIBUTORS, you need a tax ID. Please see your State’s Department of Revenue’s website for information about a sales & use tax ID.

#3 Q: Can I use my website as my registered business name?

A: Your website or online store is your store name. Business names can differ from your store name. But the important thing is to register with your state.

#4 Q: I have an EIN. Is this the Tax ID the suppliers want to work with them?

A: An EIN is a federal ID number. This allows you to have employees and submit taxes on those employees. Many wholesale suppliers will accept an EIN, but you also need to get a Tax ID number from your state to charge sales tax to any customer that is also located in your state.

#5 Q: How do I get a tax ID?

A: Getting a tax ID is relatively easy for most states! Many states have registration forms online. Simply find your State’s Department of Revenue on a search engine, the site will have a .gov at the end of the URL. Search for: State Name Department of Revenue or Search: Getting a Tax ID in State Name.

#6 Q: Our Sales Tax Rules?


A: Rules of Sales Tax - As a seller, you are required to calculate and charge the state, county, city, and other local sales tax rates where your buyer is located. ALWAYS follow sales tax rules and laws in the state where your buyer is located. NEVER charge a customer another state's sales tax.


Identify whether or not you will need to charge an additional state sales tax for the state your supplier is located. Not many states have these rules, but Michigan is an example of a state where you would need to do this. If a customer that places an order on your site lives in Michigan and orders a product that is coming from one of your Michigan-based suppliers, then you will have to charge that customer a state sales tax for Michigan because they live in the same state that business is located in. If you do have any additional tax rates you need to charge for your suppliers, then you will need to know the rate and conditions when that tax rate is applied.
Typically, you are required to collect sales tax on orders that you have shipped to anyone who lives in the same state as you. Please check with your state tax board to see if you are required to collect sales tax for the type of selling you plan to do. Our Michigan sales tax is 6.00%


 Making Your Online Business Legal: Why and How

It's not uncommon for new online retailers to be intimidated by the thought of acquiring reseller certificates, EINs, and DBAs. But if you sell physical goods on the internet, you can't afford to let a little paperwork stop you from experiencing the benefits of being a legally recognized business. Because, if you want to buy your inventory from real wholesale suppliers, you must be an official, legal business.

However, if the IRS were to catch a wholesaler selling tax-free goods to an end consumer, that wholesaler would wind up in a world of legal and financial trouble. So every business they sell to must demonstrate that they're a legally authorized reseller, buying their goods for resale and not for personal enjoyment.

We will Need to See Some ID, please...

Scan, File Attachment your Sales Tax License:

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As an online retailer, you're responsible to collect and pay sales tax on all sales to customers in your state. Therefore, you're required by law to register for a state sales tax ID (a.k.a. reseller certificate) when you set up your business. Registering is as easy as going to your state tax authority website, clicking on 'Forms and Publications, and filling out the registration form. Typically, you'll use a copy of this document to verify your business's legitimacy.

Not every state imposes a sales tax on retail items, however, and that complicates the issue. If you live in a tax-exempt state, you're unable to acquire a reseller certificate. In that case, a wholesaler will need another form of identification proving your business's validity. Some of the most common alternative forms of proof are as follows:

  •  If you're operating as a sole proprietor or partnership, you can file a Doing Business As certificate (DBA) at your county clerk's office and supply your wholesaler with a copy.
  • If you're an LLC or a corporation, you can supply your wholesaler with a copy of your filed certificate of organization or articles of organization. You'll also need to include a copy of the confirmation form you received back in the mail, that lets your supplier see that the document has been filed.
  • If you're operating without a trading name or a DBA, then you'll most likely have to provide a federal tax ID (EIN). Although the law allows you to register your social security number as your EIN, it's a much better idea to let the government issue you one. They're free and having one to use in your business correspondence means that you aren't sharing your SSN with anyone you don't have to be.
  • Another option is to use your state tax ID number - this is different than your state sales tax ID number. Even in states that don't charge sales tax, other state taxes might apply to your business. Usually, the state will issue a state tax ID number, which you can use as a form of business identification.

The bottom line is, no matter how you structure your online business, you must take steps to make it a legitimate, authorized business before you can work with true wholesale suppliers. The minimal time and effort you'll spend will more than pay for itself in the rewards of being able to set up those wholesale accounts and get a consistent, reliable supply of products at prices that give you room to turn a profit.