Re: Business Tax ID prior to business plan

Posted by hlunsford@bellsouth.net on June 29, 2006, 12:15 am

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Mark A. Hvasta, CPA wrote:

>>> I am writing up my first business plan. I've identified

>>> products I want to sell and a process in which to sell them.

>>> I contacted one company, but they refuse to give me a

>>> wholesale price list- or other information- without a valid

>>> business tax id. I am interested in getting the id from IRS

>>> and state tax agencies and pursuing this. However, if the

>>> wholesale margins don't work out, I will cut and run and

>>> chalk it up to experience. My concern is that if I don't

>>> pursue this project, I will have a business tax id and no

>>> income and will then have to file some kind of tax form. My

>>> concern, and it may be irrational, is that this could

>>> trigger problems for me like a potential audit. Is this a

>>> valid fear?

> The "state tax ID" they're probably looking for is probably

> a state sales tax exemption certificate. This will allow

> you to purchase goods for resale without paying sales tax

> (and from the seller's perspective, without collecting it).

> As you're looking for wholesale prices lists, they'll

> definitely want to make sure you're eligible to purchase

> from them w/o them having to worry about collecting &

> remitting state sales taxes.

Additionally, some states require a federal ID # before
they will issue the desired sales tax number. I suppose
it's a check and balance on people who think that mere
possession of a sales tax number will allow them to buy
everything without paying the tax.

ChEAr$,
Harlan Lunsford, EA n LA

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