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This is a question I get a lot and the short answer is “yes.” In the beginning there’s a lot to think about to get the business started, equipment and services to buy and inventory to process.

For someone new, I suggest getting a Tax ID from the IRS (this is NOT the same as incorporating) over the phone, buying a “Doing Business As” from your State (usually about $10-$25 and also available online) and then ordering a sales tax certificate from your state. You can use the tax ID and DBA to set up your Amazon accounts, and your business bank account. You will use the sales tax ID to buy merchandise without paying sales tax.

Later, when you are more comfortable with the business, revisit the idea of incorporating. There are many tax advantages to incorporation that may appeal to you. The book that was most useful to me in explaining the benefits of incorporation:  Incorporate and Grow Rich! By C.W. Allen. It is written in clear language with helpful examples. It is selling for around $5 on Amazon.com (see link).

It shows the difference between someone incorporated and someone who is not incorporated in a variety of examples and it made a believer out of me. The book shows the true meaning of the saying “A penny saved is a penny earned.” (Thank you Ben Franklin!).

By the way, speaking of taxes, be sure to get set up for quarterly reporting for your sales tax. You won’t have enough tax to pay monthly for some time and it’s a hassle to file monthly.  Amazon gives us great reports that make it a snap to fill out my form. Starting in 2012, they will be gathering my Texas taxes for me. This is a new program so stay tuned.

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