It’s easy to set yourself up to buy goods from wholesalers. You can do it from your home office. Follow these steps and PRESTO, you’re ready to go in search of suppliers.
1. Apply for an EIN (Employee Identification Number) at The IRS
You can apply for a number online. It’s instant!
Be sure to read Top 5 Reasons for Rejection of an Application
No need to become a corporation now – unless you have employees or plan to sell a product that may trigger a lawsuit. Sole Proprietor will work fine for starting out, it’s easy to upgrade if you decide to take your business to the next level and become a corporation.
2. Apply for a Tax ID number in the state you live in.
After applying for an EIN, wait a few days before applying for a State Tax ID number. Your state will need your EIN so you want to be sure the IRS has it in their database.
Google your state’s Revenue Department (example Florida).
Since I live in Minnesota (definitely NOT a sales tax free state) I went here: http://www.taxes.state.mn.us/. On the front page under the Business header is a link to Register for a Minnesota Tax ID Number. If you are fortunate enough to live in a sales tax free state you will need a disclaimer form. You can find this on your state’s Revenue Department website.
3. Get a credit card just for business.
Wholesalers want you to establish a credit history before giving you terms – like Net 30 Days. They want you to pay up front with a credit card the first few times you place an order.
I like to have a card that gives cash back. This only works if you never carry a balance. If you plan to carry a balance, even for a short period, go for the card with the lowest interest rate.
4. Choose Business Name
If you plan to sell online on your own website or eBay you need to answer these questions:
If you are a Sole Proprietor you don’t need to run a check on your business name. But, if you plan to become a corporation later, you should run a Business Name Check in your state. You cannot legally use a name that someone else is already using in the state you live in. To run a check, go to Google and type in Corporate Name Check Your State (example Wisconsin).
5. Open a Business Checking Account
It’s best to have a separate account for all business transactions. If you are not a corporation, tell your bank you want to set up a DBA (Doing Business As) account or they may not deposit checks made out to your business name. Get your business name on your checks. I like to use small, local banks, because I find them more helpful getting my businesses off the ground. Don’t pay more than $10.00 per month for a basic business account.
Congratulations! You are now a business. You are free to seek out wholesalers and buy until your hearts content. Be careful out there, many businesses call themselves wholesalers but their prices do not reflect that. They are usually middlemen and take advantage of people who don’t know better. Anyone who advertises We Cater to eBay Sellers is probably too expensive and million other people will be selling the same junk.
To find out more about how you can start your own internet based business check out Skip McGrath’s site.
Skip even offers a program for buying wholesale.