What you need to provide legally for a dropshipping business can be confusing. Whether you’re a foreigner looking to dropship into the USA without an SSN or do not want to disclose your SSN, I’ll guide you through which stages throughout a dropshipping business an SSN will be necessary.
Each country will have its own Social Security Number equivalent. This will be a National Insurance Number (NIN) in the UK, a Tax File Number (TFN) in Australia and so on. I will use the term SSN for this article.
Any advice I provide in this article is not professional legal advice and I recommend you seek the advice of a professional before pursuing any of the information in this article. I am giving my personal advice from my own experiences and research.
Do I Need an SSN to use Shopify?
For most people, the majority of dropshipping will be done using the Shopify platform. According to Shopify, you must provide a Social Security Number to verify your identity so the IRS can accurately track your earnings. Shopify is legally obligated to do this by law in the USA.
However, you can instead apply for an Employee Identification Number (EIN) which is generally accepted as an alternative to an SSN and has several benefits over an SSN. These include it helps prevent identity theft and protect your business. You can check out more benefits of using an EIN in this article. If you end up hiring employees you will need to get an EIN at some point anyway.
It is not guaranteed that Shopify will accept an EIN over an SSN, however, you can submit a request. This is currently one of the only options available for using Shopify without an SSN.
Do I Need an SSN to use PayPal?
Whilst you do not have to use PayPal for a dropshipping business, it is recommended. PayPal is one of the most commonly used and accepted forms of payment for e-commerce businesses. Consumers trust PayPal and will be expecting it as an option, without it you can expect a decrease in your conversion rate.
According to PayPal, you will need to provide an Employee Identification Number (EIN) or an Individual Tax Identification Number (ITIN). You will also need to provide proof of your business details and your individual documents have to match your business and the details you provided when signing up with PayPal.
An EIN, ITIN or SSN can be used for your Tax Identification Number (TIN) when signing up for PayPal. PayPal is not a bank, they legally require your TIN for the IRS and you will not be able to create a PayPal business account without these documents.
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Do I Need an SSN to Run Meta, TikTok and Google Ads?
If you planning on creating a dropshipping business, chances are you’ll be running Meta (Facebook), Instagram, TikTok or Google advertising campaigns. These are the most effective and popular platforms for dropshipping merchants to advertise and without paid ads, it can be difficult to drive traffic to your dropshipping store in the early stages.
It does not matter which country you reside in, you have to provide your Tax Identification Number (TIN) to run ads. If you’re based in the USA and your business type is a Sole Proprietor, this will be your SNN or an EIN if you’re a Limited Liability Company (LLC).
Meta, TikTok and Google require your tax information to meet their legal obligations to the IRS. An EIN can be used in place of an SSN to verify your business and to meet the needs of the tax departments.
For more information on providing your SSN to run ads, you can check out;
Will Suppliers Require an SSN to Dropship?
If your dropshipping is from suppliers based in the USA, the UK, Australia or Canada, these suppliers will most likely require a Tax Identification Number. Before doing business with them, they will send you a contract agreement with all the dropshipping terms and conditions and providing your SSN or EIN number will be part of that contract.
If you are receiving any credit terms from the supplier, they will need your Tax Identification Number for tax purposes and to help protect their company. I would be hesitant to work with any US-based supplier that did not require tax information.
If you’re dropshipping from China using a platform such as AliExpress, it’s very unlikely any AliExpress suppliers will ask for or require an SSN.
However, if you transition from dropshipping to buying in bulk from Alibaba, Chinese-based suppliers and manufacturers may require an SSN or EIN. This is done because bulk orders can often not be cleared by customs until proof of business is shown which is in the form of a SSN or EIN.
For more information on domestic suppliers, I have an article on how to approach a company to become a supplier.
Can You Do Dropshipping Without an SSN?
If you’re a US citizen and you looking to start a dropshipping business, you should have an SSN. It is technically possible to dropship without an SSN but it will be difficult. You can use EIN in place of an SSN in some circumstances, however, it would be preferable and often essential to have both.
An EIN is essentially the same as an SSN but for your business. You will require one or both tax identification numbers depending on the platform you’re signing up for and your business requirements.
If you started your business as a sole proprietor, you do not need an EIN and can only use an SSN. However, if you hire any employees down the track as your dropshipping business expands, you will require an EIN.
Although signing up for an EIN is a more complicated process, it is worth considering in the early stages of a dropshipping business. The advantages make it worth it and it is something you may have to do eventually anyway.