Do You need a Tax ID to sell on Amazon?

There are a lot of people who want to sell their products on Amazon. You can register yourself on the platform but you would need tax id to sell your products on Amazon. However, if you are not a resident of US, you will have to produce your EIN number.

Have you ever thought of turning your paper-based business into online-oriented and selling on online retailers such as Target and Amazon? Have you filed for tax id and understood the pre-requisites of selling on Amazon?

If you have all these questions hovering your mind, then you are at right place, we will answer all your queries in this article.

Do you have to have a tax ID to sell on Amazon?

tax id

Yes! You require a tax ID to sell the products at Amazon and there is a specific criterion for selling the products on Amazon.

Amazon has a policy that if an individual seller makes transactions greater than 50 in a calendar year, then you will have to provide tax identity for selling on Amazon.

One of my friends sells on Amazon and when he started selling in the first year his transactions were less than 50 but when he crossed 50 transactions in the next year, he got an email from Amazon to provide tax identity for selling on the platform.

He was directed to go to the settings tab and go to account info and edit legal section. Here Amazon asks your permission to take a short interview to further assess your credentials.

  • Note that if you have reached 50 transactions and the required information is not provided to Amazon, your Amazon selling privileges will be suspended until you provide the information.

Do you need a sellers permit to sell on Amazon?

You do not need a permit to sell on Amazon. However, if you are selling something which is regulated by the government, you will need to sign up for it and start selling.

This link will help you in getting more information related to permit.

Do you have to be a registered business to sell on Amazon?

seller tax id

Amazon will not need your registration documents to sell on its platform. Also, you ought not to be a business to be able to sell on the platform. Local governments may require you to register your business before selling.

Do you need a business license to sell on Amazon?

As long as what you’re selling is not federally regulated then you don’t need to have a business license to sell on the internet.

Most of the products sold on Amazon are not under federal guidelines and these products so not need any specific business license or government approval to start with.

This link will help you in the deep understanding of federal regulations.

Platforms to sell online without a license

e-Commerce Platforms

So, If you’re selling on the following marketplaces you don’t need to register a business or have a business license.

  • Facebook
  • Shopify
  • Amazon
  • eBay
  • Etsy
  • Craigslist

You can buy and sell on any of these sites without forming a business or having a business license.

You can also validate your business idea here and test the branding of your product, before start selling it online.

If you are not a money making business and are continuously in loss due to various reasons, then the central revenue department will not be interested in your business.

As soon as you start making money, they will come looking for you.

Here we will define steps to take your business online.

How to Register Your Online Business

register-business

Here are the following steps you need to take to register your online business once you’re making a profit:

  1. Choose a Business Structure
  2. Register a DBA “Doing Business As” Name
  3. Get a Sales Tax ID
  4. Get a Federal Tax ID

Do you need an EIN to sell on amazon?

Most of the people are confused if they can freely sell on Amazon without needing for registration and everything. Our answer is Yes! But there is a catch; you need to have Social security Number or an Employer Identification Number. All the people living in the US have a Social Security Number and all others living outside of the US will be identified through Employer Identification Number.

Why do you need it?

Let’s go into a little more detail regarding the three reasons that you’ll need an EIN to sell on Amazon:

  1. Amazon would need something to identify you – If there is no formal process of registration on Amazon Market place, then platform would become free for all and people will open multiple accounts on the platform, giving Amazon and government hard time finding the revenue source and number of sales in a given year.

Amazon has a very strict policy, which restricts sellers only to a single account and thus Amazon requires you to have a ID so that there is a streamline in the sales numbers that the company report and actual sales numbers

  1. Tax purposes for the IRS – Internal Revenue Service, collects tax in the US for all the individuals and companies based in the US. They require you to have SSN or an EIN to conduct business for a specific sales number.

SSN and EIN help Internal Revenue Service in the identification and distribution of tax amount based on your profile. If there is no SSN or EIN number, the companies would have multiple accounts and would be evading tax

At the end of each year, Amazon reports sales numbers to the IRS, which then checks these against the numbers that each of the Amazon sellers report to the IRS. Without an identifying number, Amazon can’t submit these to the IRS.

  1. Importing and customs – You must be familiar with the US Customs and Border Protection (CBP), this entity also require your identification if you are sending the goods outside the US or are operating outside the US.

What is EIN?

 An EIN is more common with companies and is what you, as an international Amazon seller, will be looking to attain. An EIN can be attached to an individual or a company.

Difference between an SSN and an EIN?

In the US, every person born here is given an SSN – their identifying number for the rest of their life. It’s used for taxes, retirement, other forms of identification, and more. If a citizen with an SSN would like to conduct business in the US, he or she can do so without forming a corporation and just using the SSN on any relevant forms. Many people who sell on Amazon do just that – but it’s usually limited to the smaller sellers.

Applying and getting your EIN number

EIN
  1. There are some easy steps by which you can get an EIN…if you’re already a US citizen, you can get an EIN by the following process:
    • You can register with the IRS and get an EIN; you can click here to register on the IRS site.
  2. If you are not a US citizen and want to start your business in the US by getting the address based in the state. You can look to engage with some prestigious booking companies such as NYMail and they can provide you with a more public-facing NewYork address. These mail services are quite popular in the US as you can send your products to customers through them.

Here are a few we also suggest looking at:

  1. MailboxForwarding
  2. USAMail1
  3. Viabox
  4. Now you will need to have IRS Form SS-4. You can also call the IRS as the next step and they will provide more information on this.
  5. You can call IRS at +1-267-941-1099 and this is a toll-free number and they are open from 6 AM to 11 PM from Monday to Friday. IRS does not take much time to issue the EIN number and they will provide you EIN as soon as possible. Make sure you’re the one calling, not an employee of yours – the IRS representative will require that the caller be authorized based on the information provided to them.

Conclusion

Amazon will require your tax ID if your transactions are exceeding more than 50 and you will need to provide your tax ID there. However, in the case of fewer than 50 transactions, you don’t need any tax ID.

One of my friends was selling more than 50 items on Amazon as a seller and he got the notification from Amazon for presenting his tax id in the next year.

He registered with his SSN to provide tax information to the IRS.

We have covered most of the critical points to note on having Tax Id to be able to sell on Amazon.

Other guides to check out – Dispute a charge on Amazon, Transfer Amazon gift card to PayPal, and Amazon Return Policy.

If you have any other question similar to this one, you can submit your feedback or connect with us, we will try our best to include that in the next article.

guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x