Are you considering starting an Amazon business and wondering if you need a Tax ID or EIN to sell on Amazon? You may have heard that a business license or structure is required to sell on Amazon, but all the different requirements cannot be unclear.
This article will explore exactly what you need to know before selling on Amazon, from registering for a Tax ID and to setting up an Amazon Business account. Understanding these requirements in detail ensures you’re prepared to start selling successfully on Amazon.
- 1 Is Tax ID Necessary for Selling on Amazon?
- 2 Why is Tax ID a Necessity for Amazon?
- 3 Registration Process for a Tax ID
- 4 Can I Sell Products Online Without Registering For Business?
- 5 Final Thoughts: The Requirement for a Tax ID
Is Tax ID Necessary for Selling on Amazon?
The answer to the question is yes. Whether you’re an LLC, a sole proprietor, or a corporation, you will need a Tax ID to start selling through an LLC Amazon Seller account. So regardless of whether you make a few dollars or a million, all businesses that earn money through such an account must have essential documentation and tax information.
When you register for the Amazon seller program, you will be asked to finish a tax interview. During this process, you must be ready with your Social Security Number (SSN) or Employer Identification Number (EIN).
Why is Tax ID a Necessity for Amazon?
The key reason why Amazon needs a Tax ID is that it wants to identify its sellers. This identity ensures that a seller is not running several seller accounts on the platform. Not to mention, it further results in legal protection for the seller and buyer.
Another critical reason is the necessity of identifying and separating sellers from buyers. A Tax ID aids in the prevention of both parties duplicating accounts that can be utilized to obtain an unfair online advantage or to corner the market.
Apart from all this, Amazon is also answerable to the Internal Revenue Service at the end of calendar years. At this point, the company must reveal its total sales numbers to the IRS. If these numbers do not match the income figures informed by the Amazon sellers, the issue is investigated thoroughly.
Hence, Amazon needs all of its sellers to share their EIN. This is to inform you about the sales of their seller accounts to the Internal Revenue Service every year.
Last but not least, the U.S. Customs and Border Patrol demands these identities to process all exports and imports and ensure that the sold products reach their individual Amazon warehouse on time.
Registration Process for a Tax ID
Whether you have formed an LLC or are a sole proprietor, registering for a business Tax identity is the same for all sellers in the U.S. Below is a detailed explanation of the steps you must follow to get an EIN.
1. Checking the Requirements and Rules
The first step is to visit the IRS website to look at the IRS requirements and regulations. This will further aid you in determining if you’re eligible. If you’re in the U.S. territory or the United States, you can register with your ITIN or SSN for an EIN.
2. Scanning for Necessary Documents
Before starting the application process, ensure you are ready with all the information and documents. You can finish the entire report only in a single session. This further implies that an inactivity status of over 15 minutes will return you to zero.
And starting an application from the beginning means providing information about the business, the legal owner of the online business, and about you.
3. Proceeding to the Application
Once you have the necessary documents, you can proceed with your application process free of cost. After completing and submitting it, you’ll receive an EIN in no time, provided your input details are correct. You can form a sole proprietor doing business as a company or create an LLC through this number.
Can I Sell Products Online Without Registering For Business?
Selling products online without registering for a business is possible, but certain rules and regulations must be followed. Depending on the platform you sell through, you may need a seller’s permit or license. For example, if you wish to sell on Amazon, you need an Amazon FBA account and a sales tax permit.
Additionally, if your business earns income from selling products or services, you must obtain a federal tax identification number (EIN). The IRS uses this taxpayer identification number to identify your business and collect federal taxes.
Furthermore, each state has business requirements, including obtaining a business license or tax I.D. number. It is important to understand and comply with all relevant regulations before selling any products online.
Final Thoughts: The Requirement for a Tax ID
In this article, we answered the question regarding the necessity of a tax I.D. for Amazon sellers and the reason behind the same. We further shared the registration process for a Tax ID through which one must go to begin selling on Amazon in the United States.
Unless you plan to sell a service, you must possess a sales tax I.D., a business license, and a tax I.D. number to begin selling on Amazon. Since the overall requirements vary based on the kind of your business, the types of products you sell, and your location, you must conduct research thoroughly before creating an Amazon Seller account.
FAQs: Tax ID to Sell on Amazon
Amazon mandates that all sellers finish the United States Tax Identity Information interview. Thus, you can only sell products on Amazon with a tax I.D. number.
IRS or Internal Revenue Service rules demand that the U.S. payment processors submit a Form 1099-K to inform about the payment volume data or the unadjusted yearly gross sales for consumers who have over $20,000 in gross payment volume and over 200 transactions. Since Amazon Payments meets both thresholds, it reports to the IRS.
Amazon offers a program called Amazon Tax Exemption Program that allows tax-exempt purchases for sales by participating independent 3rd party sellers, Amazon, and affiliates.
No, you do not need a Social Security Number (SSN) to sell on Amazon. However, if you are a non-US seller, you must provide your tax identification number (TIN). This can include an employer identification number (EIN) or a value-added tax (VAT) number. You will also be required to provide additional documentation to verify your identity.
Yes, you can get an Employer Identification Number (EIN) even if you don’t have a social security number. The IRS does not require a social security number to obtain an EIN application.
Instead, the IRS requires that you provide a valid passport or other government-issued identification documents. Additionally, the applicant must be able to prove that they are located within the United States or any U.S. territory.
I’m a professor, serial entrepreneur and e-commerce expert with a passion for creating successful online business models. After achieving huge success in the Amazon FBA business, I decided to make it my mission to help my fellow sellers do the same through enjoy-aiia.com .