Author: Simon Maher
Source: download
If you want to buy directly from the wholesaler, you're going to need to, quality control, get, quality control, your business legal.
Now, there are a lot of scams on the internet related to wholesaleing. Type "wholesale" into google and you'll find tons of companies willing to get you the "best" wholesale deals....for a price.
Suppose Tom wants to make a fortune on the internet selling products, quality control, . He's heard of all the people making six figures from home on Ebay, or with a Yahoo Store,, quality control, and decides he can do the same.
Only question is, where to find product. Moreover, Tom needs not only product, product at the lowest wholesale price. Otherwise, he knows there's no way to compete on Ebay and the internet if his prices are too high.
So Tom gets on google and searches for "wholesalers".
Tom's first call is to a real wholesaler (most advertisements on google for wholesalers are actually middlemen with good SEO skills, so what out). The wholesaler is happy to help, all Tom needs to do is fax an application form containing his business name, Federal ID number (EIN), and state resale tax number.
"Application forms? Tax ID numbers? That sounds like WORK.... legal work," thinks Tom. So he heads back to Google to find a different wholesaler.
And does he. He finds "GRQ Wholesalers'" website, with big bold headlines and pictures of people holding fistfuls of money and dollar signs everywhere. "Everyone is getting rich in wholesale!" the site screams.
All Tom needs, quality control, to do is sign up to be a reseller. Heck, GRQ will even dropship to his customers--Tom doesn't have to stock inventory or make minimum orders, quality control, . All this for only $19.95 a month, plus a $50 setup fee. No tax id number, no sales tax number, no paperwork.
Just profits, quality control, .
Well, the more profits part is true....for GRQ. GRQ is a middleman, probably with high prices, inferior inventory, poor quality control, and slow shipping. GRQ is buying from a real wholesaler and marking up prices to you., quality control, Even worse, they are charging you a fee for the privilege of paying higher prices.
Another internet millionaire created....not Tom, but GRQ.
Bottom line: You must be a REAL business to get REAL wholesale prices
How to Get Legal for Wholesalers Fortunately for you, getting legal isn't as hard or scary as it might seem. Just find the forms, follow the directions, and you'll be fine. The worst that can happen is the government returns your form and says you did it wrong and you have to resubmit. They aren't going to throw you in jail or anything.
Federal Tax ID Number
If you have not incorporated your business, then your Federal Tax ID number is simply your Social Security number. This goes for those who filed as a DBA (Doing Business As or Fictious Name Register)--you can also use your Social Security number.
If your business is incorporated, quality control, or an LLC, then you need to use your EIN or FEIN. The EIN and FEIN are the same thing... Federal Employer Identification Number or Employer Identification Number.
Get your EIN by filling out an IRS SS-4 Form. Download an SS-4 Form from the IRS here. You'll need, quality control, Adobe Acrobat to read this file.
Free instructions for filling out the SS-4 are here. Go to the "Get an EIN" tab and follow the directions.
Sales Tax Resale Number
Besides the FEIN/EIN/Tax, quality control, ID number, your state resale, quality control, tax number is critical. What this number does is allow you to buy products without paying sales tax.
The government only collects, quality control, sales tax on an item once-when the final consumer buys, quality control, it. Therefore, retailers and others who purchase goods for resale, quality control, don't pay sales tax. Instead, they collect sales tax from the end consumer and pay it to their state.
In order for the wholesaler not to charge you sales tax, however, they need to have your resale number on file. Otherwise, they are forced to charge you sales tax and that throws their whole accounting system off and most will not deal with you.
Fortunately for us, getting a resale tax ID number isn't that hard.
Find your State's Department of Revenue or Division of Taxation from this list. Follow the instructions on the form, including paying the fee Each quarter file a sales tax return and pay all sales tax you've collected With these two numbers in hand, you should have all the information you need for getting legitimate, quality control, wholesalers to work with your business. By buying at true wholesale prices, you've jumped the first hurdle to having a successful internet business.
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Simon Maher is a contributor for LLC Made Easy. Learn more about choosing and managing your business entity at LLC Made Easy.
