Starting a dropshipping business is among the easiest ways to start an eCommerce brand with low initial investment. There is no need to purchase inventory, take care of shipping, or even rent a warehouse.
Legal and tax matters, particularly for U.S. LLCs or non-resident entrepreneurs, however, are more complicated.
Asks whether an EIN (Employer Identification Number) is required.
Most cases require the short answer of yes. In this case, we will explain:
- What EIN stands for
- Why it is important for dropshipping businesses
- How international entrepreneurs can acquire one
- The correct procedure for obtaining an EIN for Dropshipping
- And other general inquiries related to EINs and U.S. LLCs
What Is an EIN?
An EIN (Employer Identification Number) is also referred to as Federal Tax Identification Number and it is a 9 digit number allocated by IRS to identify businesses for tax purposes. This number is best thought of as SSN for your company.
Here’s what an EIN does:
- Oversees federal tax submissions for your company
- Helps in opening a business account in any U.S. bank
- Allows you to hire employees (if applicable)
- Enables registration with payment processors like Stripe, PayPal, and Shopify
- Helps vendors, wholesalers, and suppliers accept your business as valid
As a sole proprietor or solo entrepreneur, an EIN can enhance your professionalism, organization, and tax compliance.
Do I Need an EIN for My Dropshipping Business?
Almost all cases yes, whether you are operating a Shopify store or an Amazon seller, an EIN is important for business compliance.
✅ 1. You Formed a U.S. LLC
For both U.S. and international dropshippers, forming a Limited Liability Company (LLC) is the most common option. In this case, the IRS mandates you to have an EIN, why?
Because the LLC is a separate legal entity from its owner. The IRS has no means of identifying the company’s tax obligations based on your name or SSN, and as a foreigner, you won’t have an SSN.
✅ 2. You Intend to Open a U.S. Business Bank Account
A business bank account is needed when your company conducts international business for tracking income and expenses. Some banks like Mercury, Relay, and Wise will not allow foreign individuals open a business account without an EIN number.
Without a business bank account, you will find it challenging to:
- Track revenue and expenses
- Collect payments in USD
- Connect to numerous processors
- Establish business credit
✅ 3. You Plan to Work with Payment Processors
Payment processing companies like:
- PayPal
- Stripe
- Shopify Payments
- Square
- Authorize.net
Require verification for your business. When working with high-volume transactions and especially in the United States, providing an EIN becomes crucial. Failure to provide one can result in:
- Delayed payouts
- Frozen funds
- Account restrictions or termination
✅ 4. You Intend to Foster Trust with Customers and Suppliers
Many suppliers, particularly those on AliExpress or Alibaba or even wholesalers based in the US may require some form of tax document before engaging in business. With an EIN, it gives you a semblance of professionalism as it shows that you are a registered business entity.
This builds trust and you can access better pricing and wholesale deals.
✅ 5. You Intend To Do Your Filing For Taxes Correctly
Whatever the case, as a foreign owner of a U.S. LLC, you will still have to file an annual tax return. The tax forms you will be required to use include:
- Form 5472 (for foreign controlled single member LLCs)
- Form 1065 (for multi member LLCs)
- Form 1120 (for corporations, if you elected C-Corp taxation)
Not having an EIN while filing taxes is one of the greatest mistakes that can lead to IRS penalties or tax return rejection because it raises alarm bells and suspicion.
What If I’m a Non-U.S. Resident Dropshipper?
Most international entrepreneurs coming from countries such as India and Nepal, UAE or even Nigeria have been trying to access the US ecommerce market. Here’s what they should know about LLCs.
You need an EIN without exception
First of all, you will need an EIN if opening a US bank account and for other essentials such as:
- Connecting Stripe or PayPal account to your store
- Compliance with tax laws
- Obtaining wholesale prices or vendor approvals
- Demonstrating legitimacy to the customers and partners
The registration process for LLC does not require a SSN or ITIN number. Instead, what is needed is an EIN.
When an EIN Might Not Be Necessary
An EIN might not be needed in the following scenarios:
As a U.S. sole proprietor with zero employees:
- If you casually sell goods and report taxes using your SSN, an EIN isn’t required. Even so, in this scenario, having one is advised.
Selling only on eBay or Etsy:
- Individuals who only sell as a hobby and earn minimal income might not need an EIN. Once it starts generating a real profit, then it is essential to have one.
If you conduct business entirely outside the U.S. without registering:
- If you’re only selling to your local customers and not dealing with the U.S., you don’t need EIN. However, when you start servicing the U.S. market or set up an LLC, you will need one.
How to Get an EIN for Your Dropshipping Business
These are the steps to obtain an EIN as a non-resident:
Step 1: Create a U.S. Business (Typically an LLC)
Forming an LLC in a business-friendly state such as Wyoming, Delaware, or Florida is the first step. You can do this online through services like Bizstartz.
Step 2: Complete IRS Form SS-4
This is the form you need for your LLC and EIN. As part of this form, you must provide:
- The name of your LLC
- Your business address (can be a virtual address in the U.S.)
- Business category
- Owner details
For non-U.S. applicant, you can leave the ITIN section blank.
Step 3: Form Submission
Residents can complete the process online. For non-residents:
- Send it via fax to +1-855-641-6935
- Or mail it to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999, USA
Alternatively, you can have it done through EIN service providers such as Bizstartz.
Step 4: Get Your EIN
- Faxed applications: 1 – 2 weeks
- Mailed applications: Up to 6 weeks
- Service Provider: 3 – 7 working days
Your EIN will now be required when engaging in business operations and filing taxes in the U.S.
Conclusion
Starting a dropshipping business has become easier than ever in our digital world. Still, meeting all legal requirements will provide peace of mind and ensure business continuity.
Whether you’re based in the U.S. or operate from another country, applying for an EIN should be done as it’s an important first step.
It is needed for:
- Registering your U.S. LLC
- Filing taxes
- Opening a bank account
- Using various payment systems
- Having payments processed
Establishing credibility with suppliers, customers, and partners
Future-proofing your business starts with getting an EIN for it to be recognized as legitimate.
Start Your Dropshipping Business With Bizstartz
We support entrepreneurs across the globe to:
✅ Form a U.S. LLC
✅ Get an EIN without needing an SSN
✅ Open U.S. bank accounts
✅ Launch compliant U.S. eCommerce brands
🚀 Is it time to get your EIN and start legal dropshipping?
👉 Head over to Bizstartz.com and contact us now.
Frequently Asked Questions (FAQs)
Q1: Can I apply for an EIN without a Social Security Number?
Yes. Using Form SS-4, a non US resident can leave the SSN section empty.
Q2: Can I get an EIN before forming my LLC?
No. An applicant should first register their business entity in order to get an EIN.
Q3: Will I be taxed just because I got an EIN?
Not quite. While tax obligations arise from business income and income sourced from within the U.S, having an EIN does not trigger taxes.
Q4: Can Bizstartz help me get an EIN?
Absolutely! Bizstartz specializes in helping international entrepreneurs form U.S. LLCs, obtain EINs, and launch their online businesses smoothly.
Q5: Is an EIN the same as a tax ID?
Yes. EIN is often referred to as a Federal Tax ID or FEIN (Federal Employer Identification Number).
