Do You Need an EIN for Dropshipping?

One commonly-asked question by prospective dropshipping merchants is "Do I need an EIN to start dropshipping"? As with many tax-related questions, the answer can be a little bit complicated, but here's the quick and dirty version:

Most dropshippers don't need an EIN to operate. However, it's a good idea to get one anyway.

Whether you need an EIN to dropship depends on your business type

An Employer Identification Number, or EIN, is similar to a social security number for your business. If you're starting your dropshipping business alone, you're starting a type of business known as a 'sole proprietorship'. Sole proprietorships don't technically need an EIN in order to operate - instead of paying separate business taxes (which require an EIN), you'll pay taxes on your personal tax return based on your profits.

Since sole proprietorships are by far the most common dropshipping business model, most dropshipping businesses aren't legally required to have an EIN in order to operate. However, if your dropshipping business is a partnership, LLC, or corporation, you WILL need an EIN.

Even if you're operating your dropshipping business alone, it's still a very good idea to get an EIN for several reasons:

The benefits of an EIN for dropshippers

  • Many dropshipping providers and wholesalers will request your EIN when you're ordering products.
  • Many of the permits and licenses you need to operate your business legally will require you to provide your EIN when filling out the forms.
  • If you want to set up a separate bank account for your business (usually a good idea), you'll probably need an EIN to open a business account.
  • As your business grows, you'll eventually be required to get an EIN anyway.
  • You'll need an EIN if you ever want to hire employees.
  • If you're dropshipping over Amazon FBA, it's likely that you'll need an EIN for tax purposes.
  • It helps protect you against identity and tax theft.

How to get an EIN for your dropshipping store

Registering for an EIN is easy, free, and can be done entirely online. Visit the IRS website and fill out an application for your EIN. It takes about 15 minutes, and you'll get an EIN that you can use immediately. All you'll need to complete your application is a name for your business (we recommend choosing a name with an available domain), a social security number or Truncated Taxpayer Identification Number (TTIN), and some basic information about yourself such as your name and address.

If you're planning to start a dropshipping business, make sure to get an EIN fairly early in the process. Getting an EIN only takes a few minutes, and will save you a lot of time and trouble later.

Happy selling!

Have questions or comments about getting an EIN for your dropshipping business? Use the comments section below!