This is the second post in our Sourcing for Independence series! Welcome back! Did you miss the first one? Click here to check it out.

Getting Started:
Whether you are doing this part time of full time, the main thing to remember is that you need to be a legal business.

That’s right, whether it’s a hobby or a full time effort, if you aren’t legal then you can’t legally work with genuine wholesale suppliers. It doesn’t matter where you sell either, it matters WHO you work with.

If you truly want to buy wholesale products, if you aren’t a legal business, these wholesalers will simply turn you down for an account. Why? Because they need to have a record of who you are for their tax reporting.

When you buy wholesale products from a wholesale supplier, they aren’t charging you sales taxes. They have to report to the government WHY they didn’t charge sales for your orders and your tax ID number is what they supply to show proof of that.

If a “wholesale supplier” doesn’t ask for a tax ID, they are usually doing something bad for your business. They could be sneaking the sales tax into the “wholesale price” and that just lowers your profit margin. Or, they’re not a TRUE wholesale supplier and just a middleman passing the orders to the real supplier and providing the supplier with THEIR tax ID information. Either way, your profit margins are lowered because a middleman always increases prices so they can make more profit and that leaves your business struggling to compete and the middleman is succeeding.

Now, this doesn’t apply to EVERY wholesaler out there. Some wholesale suppliers are in tax exempt States and others are overseas. But use that as a general rule of thumb when looking for suppliers to use or you can use a Directory like ours where we have already verified the suppliers are REAL wholesale suppliers and work with retailers that sell online.

Getting Legal:
Becoming a legal business is not hard and many States make it really easy with online forms and low costs.

1. Determine the business entity & name your business:
Whether you decide to start a corporation or a fictitious name or DBA (doing business as), you have to file this with your state. Many states have these forms online, so you can do a search for Register a Business in ____ and fill the blank with your state name. Look for sites that end with .gov or .org in the search results for government related sites and not other sites pushing you to buy their service to do this. You can set up many types of entities on your own. If you decide a Corporation is the way to go, you may need to consult a lawyer for help. But your State website will give you the forms to do it yourself. The Fee for this can run anywhere from $25.00 to $200.00 or more depending on the level of business you start.

2. Get a Tax ID:
A Tax ID is called different things in different States. Sometimes called a Sales & Use tax ID, or Seller’s Permit, or Reseller Certificate and etc. Basically it’s an ID number that allows you to buy wholesale products without getting taxed and to charge sales tax to customers in your State. Do this after you get your business name registered. You can find the forms for this your State’s Department of Revenue site. So just do a search for that to locate it. The fee for this can run anywhere from $0.00 to $50.00 in most States.

Once you get legal, then you can legally work with REAL wholesale suppliers, get REAL wholesale pricing and you are on the right path to success.

Don’t want to spin your gears trying to find real wholesalers on your own? It takes a lot of time and effort to find suppliers that work with online retailers and even more time and effort ensuring that they are real wholesale suppliers. So get our Directory!

We are running an Independence Day Discount, so now is great time to join!
One-time fee for a lifetime membership and new wholesale sources added every business day!

Check it out here:

By Tisha Hedges

Director of Operations for Worldwide Brands, Inc

Leave a Reply

Your email address will not be published. Required fields are marked *