If drop shipping was easy, everyone would do it, right? Well, no, because not everyone has an interest in owning a retail business, or any kind of business for that matter. Entrepreneurship and owning a business means there are legal steps that need to be taken in order to BE a business, which is an essential part of drop shipping.
Most companies will require that you are a legal business in order to offer you wholesale prices, and they will want your Tax ID number for the business. Depending on the state, it is likely that in order to not charge YOU for sales tax, they have to keep your Tax ID on file for their own records. As for your sales tax requirement, you’ll also probably need to register for a resale license and begin sending in periodic reports (and the sales tax you’ve collected) to your state. You may need to consult your local small business association for more information about your specific circumstances, and ask what else you may need to be a legal business entity.
There are companies that do not require your business license or Tax ID in order to sell you their wholesale products. Some of these are legitimate and have their own processes in place, others are not actual wholesalers and you may not have a great profit margin when you use their products. “Wholesale” is a word that can be used without a legal definition, so be sure to do your research about any company that offers wholesale products.
Once you have all of your paperwork in place, you are safe to begin your new business. We can’t promise you it will be easy, but, you’re taking a great step into a fun and profitable venture that can take you down roads you’ve only dreamed of.