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Setting Up Your Business to Deal with Real Wholesalers and Drop Shippers

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. Unfortunately, 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.