There are a lot of wholesale and drop shipping scams proliferating on the Web. Just about anyone can claim to be a “wholesaler” or offer wholesale pricing. Unforunately, there seems to be very little policing of these claims. So if you are looking for a new source for products, you need to protect yourself.
Fortunately, there is a very easy way to determine if a company is a true wholesaler. True wholesalers will always ask for a copy of your resale certificate or at least your employer identification number.
A resale certificate is issued by your state (check your state government’s Web site - just type resale certificate in the search box) and gives the recipient the right to collect sales tax. Sales tax is the real reason true wholesalers ask for a copy of the resale certificate. You see, when you purchase from a wholesaler you do not pay sales tax! The sales tax is paid by your customers. You collect is a remit it to the state. Since wholesalers do not charge sales tax, they need to know that their customers are able to collect it.
You can find true wholesale dropshippers the same way. If they do not request a copy of your resale certificate (or they charge you sales tax) then they are not a true wholesaler.
Some wholesalers and drop shippers will just ask for your employer identification number (EIN). Since the EIN is also frequently used on the resale certificate, this might be okay, but it is worth asking. If you do not have an EIN, you can get one for free from https://sa1.www4.irs.gov/sa_vign/newFormSS4.do.
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