Have you been constantly hearing about the success stories of many Amazon sellers all around you? Do you want to start the journey of becoming a successful Amazon seller yourself? If so, you need to start by getting a tax ID for yourself.
You may already have known about that compulsion, but do you know what a tax ID is? We are aware you have multiple questions about tax ID and the laws. However, you do not need to spend hours researching it as this post will be your ultimate guide to understanding whether you need a tax ID to sell on Amazon!
So, without further ado, let’s get into the details below.
What is a Tax ID and Do You Need it to Sell on Amazon?
The tax ID is exactly what it sounds like. It is the ID by which the income-regulatory authorities of your respected region verify your income tax details. In simple words, it is the ID through which the required government officials access your income and tax records.
And YES! You do need a tax ID to sell on Amazon. It does not matter whether you are just making your weekend party money or millions. If you’re selling on Amazon, you need to have a verified tax ID. Tax ID is the only credential that Amazon takes from its sellers in the name of proper tax documentation and information.
What is The Requirement of a Tax ID?
Amazon takes the sellers’ tax ID for security and checking verifying purposes. The tax IDs are unique to each individual and entity. Hence, there can only be a single seller holding a particular tax ID. With the tax ID, Amazon protects the platform from getting filled by multiple accounts of the same set of sellers or buyers.
The absence of this credential would fill the whole platform with sellers and buyers having multiple accounts, and the chances of cornering the marketing or gaining an unfair online advantage will increase by a whole lot. In short, the whole selling process will become a free-for-all fest.
Other than for security purposes, getting the sellers’ tax IDs are also a requirement that Amazon needs to fulfill. Amazon is also a business, and it needs to provide the required answers, regarding its financials, to the Internal Revenue Services, a.k.a. IRS, as well. The IRS uses these tax IDs to cross the income figures and ensure that there aren’t any mischievous miscalculations caused by duped accounts.
Does Amazon Directly Report The Sellers’ Information to The Regulatory Authorities?
No, the platform provides each seller with a unique EIN (Employer Identification Number). Amazon uses this number to regard each of its sellers in the report sheet to IRS.
The EIN is also used for the import-export purposes of goods and cargo. The US and other countries’ customs and border patrol authorities use these EINs to verify the recipient. The other name of the employer identification number is the federal tax identification number. This number is of nine digits and is assigned to each registered business. It is also regarded as the SSN (Social Security Number).
The number is used for filing and reporting taxes in April every year to the IRS. The essential requirement for getting an EIN is that you should earn more than $600 from your Amazon Seller account.
The technicalities of starting as an Amazon seller can be quite overwhelming. But to get a good start, you should get yourself financially verified. Hence, you need to get a tax ID for your business.
There is an exception for those selling services, but as Amazon is a product selling and buying platform, you will need to at least have a tax ID number, a sales tax ID, and a business license to get started and sell stuff on Amazon.