EIN & ITIN
Many of our clients frequently ask whether it is required to have an Employer ID for their e-commerce stores such as Amazon and Shopify. Due to the digital age we are in, most people turn towards the online business world. Therefore, many e-commerce sites have emerged. However, a few of them are really solid and trustworthy e-commerce websites. Also, those websites have some requirements for individuals to sell on these platforms. In this article, we considered one of these requirements – having an Employer ID (EIN) – for Amazon and Shopify.
Usually referred to as an EIN, an Employer Identification Number is a tax identification number required for U.S. businesses. You may imagine that EINs are like Social Security Numbers for your business, not for individuals. Unlike SSNs, an EIN is a nine-digit number in the “xx-xxxxxxx” format and it is also known as TIN or taxpayer identification number. All businesses and individuals are required to obtain an EIN in order to file tax returns or hire employees etc. If your business has more than one owner or employee, you will need to apply for an EIN.
Amazon is highly strict about sellers not having more than one account. This is why they require an Employer ID to prevent this from happening. This process does not only protect sellers but also buyers.
For those who are not familiar with the term “Internal Revenue Service”, it is a U.S. department that manages taxes for both individuals and businesses. An SSN or EIN briefly allows the IRS to track the amount of money received and the amount spent by a person or business – basically it checks and balances. Amazon uses Employer identification number at the end of each year for reporting the number of sales to the IRS. Then Amazon compares them to the numbers that each of the Amazon vendors reported to the IRS. It is not possible submitting these without an Employer ID.
U.S. Customs and Border Protection (CBP) also needs an Employer Identification Number (EIN). Basically, if you provide more information to CBP, your process will be smoother. That is, your good will be in Amazon’s warehouses in a faster and secure way.
The answer of this question may depend on whether you are US citizen or not. To put it simply, if you hold a Social Security Number in the United States, you do not have to apply for an EIN to sell on Amazon.
Yes, the IRS requires all businesses to have an Employer ID to apply for wholesale dropshipping accounts in the e-commerce platforms such as Shopify.
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