This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
I've noticed that a lot of wholesale vendors (most, actually) require a federal tax id number to set up an account, some to even view their wholesale prices. Right now, I'm still learning the process and have surprised myself by selling a few pieces here and there, but I'm not sure if I'm going to be able to turn it into a "business" so to speak. My questions then:
-Do I need a Tax ID number?
-When should I worry about it?
-Are there downsides to having one? What if I don't end up making a business out of this? Are there punishments?
-How much of a hassle is this going to be?
-Are wholesalers going to talk to me at all without one?
I just buy my shirts over the net and most won't care if you have one. I have the federal number but those wholesalers your talking about want your State Tax ID, not the Federal one. I don't have the State one yet myself. I am thinking I am going to have to get one shortly though.
A federal tax id is needed if you have employees, otherwise, you can use your social security number. As for the vendors, Adam already mentioned you need a state tax id. This could also be called a vendor's license or a reseller's certificate.
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I just started my company and will be getting my garments made soon so I'm sorta new to this too. I think you should get your state tax i.d. number, it's needed for some of the things you will need for your business like to see wholesale prices and get a new bank account. You should go ahead and register your company and legitimize it and at the same time you can apply for your state tax I.D. number. I think you also need it for your taxes at the end of the year.
Not much. Lots of info on the forum how to get one
Quote:
-Are wholesalers going to talk to me at all without one?
Not many will. You definitely won't be getting the best prices.
Quote:
-Are there downsides to having one? What if I don't end up making a business out of this? Are there punishments?
Yes, there are punishments if you don't report your taxes.
If you don't end up making a business out of it, then you won't need to use your reseller's permit or taxid anymore. You're not committed to using it forever.
i too am currently juggling weather or not to get mine too right now. how much cheaper will i be able to get shirts for if i have it. for example right now i cna get white gildan heavy cotton for about $1.50 per shirt or $1.20 if i am ordering by the case. would i be able to get much of a discount below this?
1. You need a resale certificate or sellers permit from your state. This because you may need to charge sales tax to some customes. I sell a lot to retailers so they need to give me a copy of their sellers permit.
2. You need a social security number if you do not have employees
3. You need a federal tax ID ONLYif you have employees.
4. You need a factious name statement from your county
5. You may need a city license in some cities. Check yours.
Allow me.....I always tell people NOT to get the resale's permit until you are sure you are going to do business. You actually have a number of years to not show a profit for the start up of your business (ask your tax advisor). This means you can write off whatever you are spending and you dont have to show a profit. I am not one to put myself into a position where someone will come knocking at my door or create a problem when I dont have to. If you are ready to go full force then you can get your resell's permit. Remember, when you do this, you will have paperwork to fill out later this year. You have the right to put zero (0) if you have not purchased anything which you will now need to pay taxes on. Some have purchased wholesale, not used a resale's permit and there is no paper trail. What's wrong with this, nothing. When you open a paper trail, you better be ready to pay out. If you are not ready for this, just take your time.
Quote:
Originally Posted by lasttuesday
I've noticed that a lot of wholesale vendors (most, actually) require a federal tax id number to set up an account, some to even view their wholesale prices. Right now, I'm still learning the process and have surprised myself by selling a few pieces here and there, but I'm not sure if I'm going to be able to turn it into a "business" so to speak. My questions then:
-Do I need a Tax ID number?
-When should I worry about it?
-Are there downsides to having one? What if I don't end up making a business out of this? Are there punishments?
-How much of a hassle is this going to be?
-Are wholesalers going to talk to me at all without one?
mtmob you can actually get the shirts that cheap from many places on the net to include eBay. Just look around, I get mine for the same without the permit or number.
We have both a state resale number and a fed tax id.. the resale number we use to buy things from companies that we are gonna resell.. We actually needed a fed tax id too.. but not to purchase things.. What we have found is this.. If you sell things to some of the bigger companies.. say you made shirts with logos for good size company and the sales were over a certain amount they have needed us to send out fed tax id and at the year end we get a tax form from them (i think its a 1099? but im away from the shop so dont know for sure).. a prime example of when you would need a fed tax number is this.. we just did some work for the ritz carlton hotel.. it was only a 300 dollar job of some gold lettering on a door.. After we did the job.. we got a letter saying to fill out this form and send them our fed tax ID number then they would process our payment. Another company that we did some work for required the fed tax id to show we were an outside contractor and not an employee.. which means that if we didnt have it they would have deducted fed and state taxes from our check.. for payment.. I know its wierd but this is what we have discoverd..
So to make a long post short.. If you are just selling to individuals and not companies.. you would just need a state resale number.. but if you plan on selling to any companies.. (or perhaps even stores) its best to get a fed tax id too.. The fed tax id is free..and takes like 2 mins to get on the irs web site..
I do know that legally companies need to get this number from you if you sell them over a certain amount of product and its always best to be on the safe side..
after the first of the year we got forms galore from companies we had sold to all last year
at least get your sale tax ID # --- even if you don't sell anything within the quarter . . you still have to send in the paperwork showing zero amount of tax collected -- otherwise you might have a fine hanging over you . . .
in the state of Florida . . there is a collection allowance (2.5%) you can hold back . . personally I don't . . I have that 2.5% go to the education fund
Need it, no. But it really makes it easier when reporting taxes and deducting expenses on your income when your business becomes more than a hobby. The EIN is just like a Social Security number, it identifies a separate entity for business and tax purposes.
To quote the folks from the IRS:
"About EINs: An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number that the IRS assigns to business entities. The IRS uses this number to identify taxpayers that are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, non-profit organizations, trusts and estates, government agencies, certain individuals and other business entities." Online Application - Form SS-4, Employer Identification Number (EIN)
It costs, nothing, can be done on-line and is a good start when you decide to incorporate and go multi-national.
well, i am just starting in this by wanting to sell a couple shirts at a local fair on the 4th of July. I too, noticed that it was better to have that i.d number when trying to buy wholesale, so i just got back from the Nevada taxation department where i spent 215.00 applying for a business license and now have to go to the city and spend another 205.00! So, apparently what i have learned so far for my state, i that i need both a state and city business license and will hopefully be getting my i.d for wholesale(reseller's permit) soon.....i hope i am not paying for more than i have too!!! the people at the office were very rude and i seem to be running into brick walls when i try to get information as to what i actually need for all of this. I have looked online, but would love to just talk to someone who will tell my get these forms, bring them here and pay this.....wishful thinking!
Do I need a Federal Tax ID Number? 
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