Starting a business is not an easy task for sure, and we all agree with it. Besides kicking off the business is not only hectic work but also making sure the legitimacy factor also fulfill before getting into any trouble. Especially if you are launching a wholesale business or in simple words a business that involves selling products to another or adopting Business to Business channel, you certainly need a permission letter of it. The permit could be a wholesome number that ensures that you are allowed to sell your products. Without it, you may get into trouble of violating the state or city’s orders of not paying the sales tax and could also end up with a huge chunk of tax. To get a tax id number to buy wholesale products and sell them to the corresponding entity.
What Is a Tax ID Number?
So let’s begin first with Tax ID Number. The tax ID number is the entity number to recognize your business in the market. It is the only key that gives you the right to execute your business legally. The Tax ID Number is also called EIN (Employer Identification Number). The number is a nine-digit unique number that is stored in the IRS databases. A tax ID or EIN is required on your tax return and is also used to make business purchases and set up business accounts with wholesalers and other businesses, retailers and suppliers. In order to grab your first Tax ID Number, you need to have your business located within the premises of the United States. And If you have you could easily get it. But make sure you must have Social Security Number or EIN before applying for it.
Similarity Between Tax ID Number and Sales Tax Number
So the pointer is Sales Tax Number is the same as the Tax ID Number. The question frequently pops up due to the nature of the business that is Wholesale. So the answer is the While in most of the US states, a tax ID number is not the same as sales tax. Sales tax ID numbers are issued by the state itself. Because the state is responsible for collecting the sales tax. While In Tax ID, these types of taxes are collected by the IRS. The department of revenue, or a similar agency in the state where the business resides, issues the sales tax ID number, certifying that your business is allowed to collect sales tax. If your company moves from one state to another, they will keep their same tax ID number but will have to register for a new sales tax number in the new state.
In order to get a tax id number to buy wholesale products, you need proper planning and blueprint before heading out. This pre-planning is very necessary if you are planning to sell your products not only to customers but also to the businesses related. You need a permit before doing this and the permit requires a lot uphill tasks and procedures to follow up. Without it, you can find yourself inadvertently violating state sales tax laws and stuck with a huge tax bill that could have been avoided. Get the required wholesale number from the state comptroller or tax office after your business receives its employer identification number from the Internal Revenue Service.
Put a File for EIN (Employer Identification Number)
Now after completing the first step, your first priority becomes Filing the EIN number. Now you will have to visit the IRS website and need to request the EIN number. The EIN is not restricted, it keeps your free from any trouble of sharing the personal information. Even if you are the only stakeholder of the business and have SSN (Social Security Number) pin. Search for IRS Form SS-4 and complete it. The online portal verifies business information and then issues the EIN immediately.
Back to the State
Now you have your EIN. The next thing to do is to visit the tax office. The purpose of visiting the tax office is to get the federal number that allows you or gives permit you to resale your orders. The number is issued by the franchise tax office. Every state has different criteria. We are more dived into Texas. If you still feel stuck, just visit the tax office first. They will guide you through to other departments. In Texas, the resale permit is issued by the Texas State Comptroller.
Apply for the tax permit via the online portal. You need all the company details and the EIN you just obtained. In Texas, the tax permit is required for anyone selling tangible goods or services in the state. When you have this 11-digit state number, you are ready to complete a wholesale application.
Wholesale Permit or License
Not every state requires a separate wholesale license. For example, after you have the resale permit in Texas, you don’t need a new wholesale number. The permit number is the wholesale number, but you aren’t done. Complete the Texas Sales and Use Tax Resale Certificate when buying from distributors. This lists the resale permit number, company information, and the goods you are buying. It is filed with the business you are buying from, not the state. If audited, the records show what you bought and the intention of sale based on your business.
While the resale or tax permit is the wholesale permit in many states such as California and Hawaii, this isn’t always the case. In Georgia, a wholesale license is required specifically for alcohol and spirit resale to businesses. This application requires a full financial statement, bonds, state permits, and warehouse information. Check your state rules and verify your compliance with local laws.