Before you can start any business, you need to do your research. In this guide, I will be answering the question: Do I need a tax ID to sell on Amazon?
My name is Nick, and I’,m one of the co-founders here at eBusiness Boss. I learned how to become an online entrepreneur through trial and error, and now I’m passing this knowledge onto you.
If you’ve decided that you want to launch your career as an Amazon entrepreneur, you may be wondering whether you need an Employer Identification Number (EIN) or Individual Taxpayer Identification Number (ITIN) to get started.
Let’s get into the details.
Do I Need a Tax ID to Sell on Amazon?
The answer is, yes, but let me explain why.
One of the main reasons why a tax ID is required to sell online is because Amazon needs to identify sellers. Tax IDs help protect buyers and sellers by preventing sellers from having multiple accounts.
Then there’s Internal Revenue Services (IRS). At the end of each calendar year, Amazon needs to disclose its sales numbers to the IRS. These numbers compared to the income need to be reported by each seller.
Amazon requires an EIN from each seller to report on sales and give the IRS the information they need.
Lastly, there’s US Customs and Border Protection (CBP). The CBP requires identification numbers to process imports and ensure your products reach Amazon’s warehouses as quickly as possible.
As a new seller, you may also be wondering whether you need a business license to sell on Amazon – I’ve answered this exact question in this guide.
EIN Basics – The What & Who
An Employer Identification Number, or Federal Tax Identification Number, is assigned by the IRS and consists of 9 digits. An EIN classifies taxpayers who need to submit returns every year.
It doesn’t matter whether you’re a sole proprietor, corporation or LLC, if you earn more than $600 annually, you require an EIN.
To obtain an EIN, Amazon sellers require an ITIN or Social Security number (SSN). The one exception is that if you’re a sole proprietor but don’t have any employees, you are ineligible for an EIN.
Once you sign up as an Amazon seller, you will need to complete a tax interview via Amazon Seller Central. Have your EIN or SSN ready for this part of the process.
What about UK sellers though?
Yes, Amazon UK sellers also need to have a tax ID to sell online, but not in all cases.
In the UK, online sellers need to be VAT registered to transact on Amazon. However, this is only required if you exceed the 12-month threshold of £85,000 in gross sales.
If you’re an international seller who is storying inventory in the UK, you will also need to register for VAT.
If you want to sell in the US from a country outside of the US, there are certain things you’ll need to know, the video below explains all.
Registering for a Tax ID as an Amazon Seller
Here are the steps to follow to register for an Employer Identification Number as a US seller.
- Visit the IRS Website to Determine Your Eligibility
If your business is located in the United States or a US Territory, you can register for an EIN.
To do this, the IRS will require an SSN or ITIN.
- Complete the Online Application Form
Before you start the online application process for an EIN, make sure you have all the necessary details ready – you can only complete this application in one session.
The session expires if you’re inactive for 15 minutes, which requires you to start over again.
Along with your SSN or ITIN, the application process requires details about your business as well as some information about you as the owner.
- Submit Your Application
The good news is, once you submit your application, you immediately receive your EIN. You can download, save, or print this confirmation to complete your Amazon seller application.
Here are the steps to follow to register for VAT as a UK seller.
- Visit the Gov.UK Website to Apply Online
Most types of businesses can register for VAT online – a group of companies can register for one VAT number.
As a UK seller, you would start by creating a Government Gateway account, which you will use to submit your VAT returns to HM Revenue and Customs every year.
There are some instances when an online application is not possible, though.
Applicants need to register for VAT via post if:
- They’re applying for ‘registration exception’
- They’re joining the Agricultural Flat Rate Scheme
- They’ve decided to register different business divisions under separate VAT numbers.
In these instances, applicants need to register via post using VAT1.
EU residents who want to sell in the UK should use VAT1A, while UK sellers importing goods from the EU should use VAT1B.
Once you receive a VAT number after a postal application, it’s possible to register for an online account to submit returns.
If you prefer a more hands-off approach, there’s also the option of using an accountant for the registration (this is what we do).
Once they send you the VAT number, again, you can register for an online account.
Regardless of how you choose to apply, you will require details on your business, turnover, and the specifics of your bank account.
- Wait for Your Certificate
In most cases, applicants don’t need to wait longer than 30 working days to receive their VAT registration certificate. You will either receive it by post or online via your Government Gateway Account.
Getting Started on Amazon
Unfortunately, these admin-focused tasks are all a part of starting an online business.
Once you complete the basics, you can focus on running and growing your online store.
Now that you know a tax ID is necessary, you are one step closer to becoming a successful Amazon seller.
As a new seller, another area you might want to look into is barcodes. I’ve put together this helpful guide on UPCs that you should have a read through.
There is also one piece of advice I give to new sellers – never stop learning.
I highly recommend you check out the eBusiness Boss Private Label FBA Course to enhance your knowledge and hone your skills.
If you have any questions about the tax ID process, drop a comment below.