Most of you out there who are already dropshipping or selling products online have heard of a Tax ID.  Many of you have probably felt daunted by the task of applying for this federally issued Tax Identification Number.  However, I am here to quell your fears on this simple process and outline the benefits that await you when you receive your Tax ID.

Also called a Employer Identification Number (EIN), a Tax ID is a nine-digit number that is used to identify you and your business to the IRS.  If you have set up your online business as a registered business of the state, you will need to obtain a Tax ID.  However, there are other benefits for those who are merely running a sole proprietorship type of operation or are selling on eBay.

• Filing your Taxes: With the EIN you will be able to qualify for a number of tax breaks and write-offs for your business.
• Hiring Employees: If you are considering hiring employees to help you with selling products online, you will need an EIN in order to file taxes for those wages the employees earn.
• Dropshippers and Wholesalers: Certain dropshippers and wholesalers will require an ID in order to set up an account with them.  This will open many doors for your product research, in that you will not be limited by your lack of ID!  It is also important to consider that by obtaining an ID, you will be able to source products from many name brand suppliers, who will not source to anyone without it!
• Tradeshows: If you would like to scope out the latest and greatest dropshippers and wholesalers, you will need to provide an EIN in order to register for a tradeshow.  Again, this could greatly broaden your horizons in terms of your online business… and your profit margins!!!

This information is meant to inform all those selling products online of the benefits of obtaining a Tax ID.  These small benefits can really increase your dropshipping business!

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