Do I Need A Tax ID to Sell on Amazon — Everything You Need To Know

Are you keen to become a successful Amazon seller but unsure if you need a Tax ID to start selling? If so, you’ve landed on the right page. There are several things you must take into consideration, one of which involves ensuring the possession of required documents and tax information. Thus, this article will not only tell you if you’re required to have a Tax ID but also walk you through the process you’ll have to go through to sell on Amazon in the United States. So without waiting further, let’s get started.

Do I Need A Tax ID To Sell On Amazon - Enjoy-Aiia

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 if you make a few dollars or a million, all businesses that earn money through such an account are required to 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 is used to ensure 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 about the sales of their seller accounts to the Internal Revenue Service every year. 

 IRS website

Last but not least, the U.S. Customs and Border Patrol demands these identities to rightly process all exports and imports as well as make sure that the sold products reach their individual Amazon warehouse on time. 

Registration Process for a Tax ID

No matter if 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 will have to follow in order to get an EIN. 

1. Checking the Requirements and Rules

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. In case you’re located 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. This is because you can finish the entire report only in a single session. This further implies that an inactivity status of over 15 minutes will bring you back 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 Application

Once you’re sure 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 that your input details seem to be correct. You can either form a sole proprietor doing business as a company or create an LLC through this number.

Final Thoughts: The Requirement of 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 in order 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

Can you sell on Amazon without a tax I.D. number?

Amazon mandates that all sellers finish the United States Tax Identity Information interview. Thus, you cannot sell products on Amazon without a tax I.D. number.

Does Amazon report to the IRS?

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 as well as over 200 transactions. Since Amazon Payments meets both thresholds, it reports to the IRS.

How do I avoid Amazon taxes?

Amazon offers a program called Amazon Tax Exemption Program that allows tax-exempt purchases for sales sold by participating independent 3rd party sellers, Amazon, and affiliates. 

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