To buy wholesale for a small business, you need three business credentials before a supplier will talk to you (an EIN, a resale certificate, and a local business license), a vetted supplier willing to open a trade account, and a working grasp of minimum order quantities, payment terms, and sales tax. The per-unit savings over retail sourcing are real, often 30 to 50 percent, but reaching them takes paperwork and patience. Here is how the process actually works, in the order you will run into each step.
The Three Credentials You Need Before Contacting Suppliers
Reputable wholesalers ask for the same documents on every application. Get them in order first. Otherwise you will start a credit application, hit a field you cannot fill, and walk away looking like you are not really in business.
Employer Identification Number
An EIN is a federal tax identification number issued by the IRS for businesses, tax-exempt organizations, and other entities.1Internal Revenue Service. Employer Identification Number You need one if you have employees, operate as a partnership, LLC, or corporation, or need to file employment or excise taxes. Even a sole proprietor who could technically use a Social Security number should get an EIN. Wholesalers expect it on every credit application, and it keeps your personal number off commercial paperwork.
The application is free through IRS.gov, takes about ten minutes, and your number is issued immediately once you finish.2Internal Revenue Service. Get an Employer Identification Number Ignore any third-party site that charges a fee. The IRS does not.
Resale Certificate
A resale certificate, sometimes called a seller’s permit or sales tax ID, tells your state tax authority and every supplier you hand it to that you are buying goods to resell, not for personal use. When you present it to a wholesaler, they do not charge you sales tax on the purchase. You collect that tax later, from your end customer.
The certificate comes from your state’s department of revenue. In most states the application is free; a few charge a small fee for paper applications or require a refundable security deposit. You complete a certificate for each wholesaler you buy from, but in many states one form serves as a blanket certificate covering all future orders with that vendor. The Multistate Tax Commission publishes a uniform multijurisdiction resale certificate that many states accept, which helps if you plan to work with suppliers in several states.3Multistate Tax Commission. Uniform Sales and Use Tax Resale Certificate – Multijurisdiction
Business License and Insurance
Most cities and counties require a general business license. Fees typically run $50 to $200 for a standard retail license, and industry-specific permits (food handling, alcohol, health-related products) can push costs higher. Renewal is usually annual. Letting it lapse can create problems beyond the fine, because some wholesalers periodically verify your credentials and will freeze your account if the license shows as expired.
Product liability insurance is worth carrying before your first wholesale order, even where it is not legally required. If a product you sell injures someone, you can be held liable as the seller or distributor regardless of whether you manufactured it. Wholesalers and retailers both face strict liability claims where negligence does not have to be proven. For a small operation, general liability policies that include product liability coverage average roughly $750 to $2,400 per year depending on your product category and revenue.
Finding and Vetting Wholesale Suppliers
The search splits into two channels: digital discovery and in-person events. Relying only on one leaves gaps in your supply chain.
Online Directories and B2B Marketplaces
Directories like ThomasNet list thousands of American manufacturers with company profiles, certifications, and production capacity data. You can filter by product category, location, and whether the company sells directly to small businesses or only through authorized distributors. Specialized B2B marketplaces work as central hubs where multiple vendors list catalog prices for verified buyers. Using several platforms at once has an obvious advantage: if one supplier hits a production delay, you already know who else carries the same product line.
For international sourcing, platforms like Alibaba offer trade assurance programs that function as escrow. Your payment is held until you confirm the goods arrived as described. That does not eliminate all risk, but it is meaningfully better than wiring money to a factory you have never visited.
Trade Shows and Manufacturer Referrals
Industry trade shows let you handle products, compare quality across vendors side by side, and meet sales reps who can move your account application along faster. Many large manufacturers do not sell directly to small businesses, but their sales offices will refer you to authorized regional distributors who handle smaller accounts. Those referrals carry weight, because the distributor knows you came through the manufacturer, which typically speeds up approval.
Checking That a Supplier Is Real
Wholesale fraud is common enough that supplier verification is a required step, not a nice-to-have. Before sending money to any new supplier, confirm a verifiable physical address, check their business registration, and ask for references from other buyers. Request product samples before committing to a large order. If a supplier will not send samples or wants full payment upfront with no escrow option, walk away. Legitimate wholesalers understand that buyers need to inspect quality before committing thousands of dollars.
Opening a Wholesale Account
Once you have identified a supplier, you apply for an account. This is closer to applying for a business line of credit than signing up for a website, because that is essentially what trade terms are.
What Suppliers Ask For
Expect to provide the following on a typical wholesale credit application:
- EIN and resale certificate, so the supplier can bill you tax-free and confirm you are buying for resale.
- Business banking information, including the bank name, account numbers, and a contact person the supplier can call to verify your account standing.
- Two or three trade references, meaning other companies where you have existing credit accounts with a history of on-time payments. New businesses without trade references often start on prepaid or credit-card orders until they build a payment history.
- Shipping and billing addresses that match what is on your business registration. Discrepancies trigger delays.
Get a D-U-N-S Number
Before applying to your first wholesaler, get a D-U-N-S Number from Dun & Bradstreet. It is free, and it creates a unique identity for your business that other companies use to evaluate your creditworthiness.4Dun & Bradstreet. Claim Your Free D-U-N-S Number Many of the largest wholesalers and government agencies require a D-U-N-S Number on applications, and it gives suppliers a quick way to check whether you pay your bills on time.
Personal Guarantees
Do not be surprised if the credit application includes a personal guarantee. That means if your business cannot pay its invoices, the supplier can pursue you personally for the balance. Wholesalers include this clause because LLCs and corporations can lose their assets, leaving the creditor with no one to collect from.
Read the guarantee language carefully before signing. Some guarantees are unlimited, so you are personally liable for the full amount of any unpaid invoices with no cap. Others limit your exposure to a fixed dollar amount. A personal guarantee on a $50,000 credit line means exactly what it sounds like.
Approval Timeline
The verification process typically takes five to ten business days. The supplier’s credit department contacts your bank and trade references, reviews your business registration, and assigns an initial purchasing limit. First-time accounts almost always get conservative limits. Expect to start lower than you would like and work your way up through consistent on-time payments.
Minimum Order Quantities
How you place an order depends on the supplier. Many distributors run online B2B portals where you log in, browse real-time inventory, and check out like any e-commerce site. Others work through purchase orders submitted by email, which must include item SKU numbers, quantities, and the agreed-upon unit prices. Either way, the order must meet the supplier’s minimum order quantity.
MOQs vary enormously. Niche or handmade goods might have minimums as low as 50 units. Standard branded merchandise often requires 100 to 500 units per order. Mass-market products from large manufacturers can demand 2,000 units or more. For a small business, getting the MOQ wrong is one of the most expensive mistakes you can make. Ordering 2,000 units of a product you have not proven sells well ties up cash in inventory that may sit in storage for months. Start with suppliers whose minimums fit your test-order budget, prove the demand with your customers, then move up to higher-MOQ suppliers once the numbers justify it.
Payment Terms and Cash Flow
Payment terms determine when you actually pay for inventory, and they drive your cash flow more than any other factor in wholesale buying.
New accounts and smaller orders typically require immediate payment by corporate credit card or wire transfer. Once you have a track record, most wholesalers offer Net 30 terms. You have 30 calendar days from the invoice date to pay in full. This credit arrangement is a real advantage, because it lets you sell the inventory and collect revenue before the bill comes due. Some suppliers also offer Net 60 or Net 90, though those are less common for small accounts.
Many wholesalers reward faster payment with early payment discounts. A term written as “2/10 Net 30” means you get a 2 percent discount if you pay within 10 days; otherwise the full amount is due in 30. On a $10,000 order, that is $200 saved for paying 20 days early, an annualized return that beats almost any other use of that cash.
Late payments trigger interest charges and can result in the supplier revoking your credit privileges or requiring prepayment on future orders. Your payment reputation with suppliers is just as important as your personal credit score.
Shipping, Receiving, and Your Right to Inspect
Wholesale orders often ship differently than retail packages. Small orders may arrive via standard parcel carriers, but larger orders travel as palletized freight on trucks. Domestic delivery timelines generally run three to seven business days depending on distance from the distribution center.
Who Bears the Risk in Transit
Your purchase order specifies who pays for shipping and who bears the risk if goods are damaged in transit. The two most common arrangements are FOB (Free on Board) and EXW (Ex Works). Under FOB, the supplier handles packing and loading; once the goods are on the carrier, the risk shifts to you. Under EXW, you assume responsibility the moment goods leave the supplier’s warehouse or factory, so you arrange and pay for all transportation and bear the risk from the start. If you are buying EXW, you need cargo insurance from pickup to delivery.
Inspect Every Shipment on Arrival
Under the Uniform Commercial Code, which governs commercial sales in every state, you have a right to inspect goods before payment or acceptance at any reasonable time and in any reasonable manner.5Legal Information Institute. UCC 2-513 Buyers Right to Inspection of Goods This matters because wholesale return policies are nothing like retail. Most wholesalers do not accept returns on conforming goods. If the product matches what you ordered, it is yours.
If the shipment does not match the order (wrong items, short counts, damage), document the problem immediately and notify the supplier in writing. Waiting weeks to report a discrepancy drastically weakens your position. Open every shipment on arrival, compare the contents against the packing slip, and photograph anything that does not look right.
Handling Sales Tax Correctly
Sales tax trips up more small wholesale buyers than any other compliance issue. The rules are straightforward once you understand them, but getting them wrong can result in back taxes, interest, and penalties.
Buying Tax-Free With a Resale Certificate
When you buy inventory for resale, you do not pay sales tax to your supplier. That is the purpose of the resale certificate. You collect sales tax from the end customer when you sell the product. Using a resale certificate to buy items for personal use or for business consumption (office furniture, equipment you plan to keep) is tax fraud. Keep your resale purchases and your business-use purchases strictly separate.
Use Tax
If you buy goods from an out-of-state supplier who does not collect your state’s sales tax, common with online purchases, you owe what is called use tax directly to your own state. Use tax exists specifically to close this gap: it applies to goods purchased outside your state that you bring in and use there. The tax rate is the same as your state’s sales tax, and you report it on your regular state tax return. Historically, states had trouble enforcing this, but the growth of e-commerce has led to significantly more aggressive auditing.
Selling Across State Lines
If you sell products to customers in other states, through an online store for example, you may be required to collect and remit sales tax in those states once your sales cross a threshold. In most states, that threshold is $100,000 in annual revenue, though a few set it higher or also count transaction volume. Five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) have no general sales tax. Once you cross the threshold in a given state, you need to register for a sales tax permit there and begin collecting.
If You’re Importing From Overseas
International sourcing can offer dramatically lower per-unit costs, but it adds regulatory compliance that domestic purchasing does not.
Customs Bonds
Any commercial import valued over $2,500, or any shipment containing goods regulated by another federal agency such as food or firearms, requires a customs bond filed with U.S. Customs and Border Protection.6U.S. Customs and Border Protection. When Is a Customs Bond Required A continuous bond covers all your imports for a full year and typically costs around $500 annually for a standard $50,000 bond. A single-entry bond covers one shipment and is cheaper but impractical if you import regularly. Most importers work with a licensed customs broker, who handles the entry paperwork, classifies goods under the correct tariff codes, and calculates the duties owed.
The De Minimis Exemption Is Gone
Until August 2025, imports valued at $800 or less entered the country duty-free under the de minimis exemption, codified in 19 U.S.C. 1321.7Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions That exemption was suspended globally effective August 29, 2025. All commercial shipments regardless of value are now subject to applicable duties, taxes, and full customs processing.8U.S. Customs and Border Protection. Factsheet Suspension of Duty-Free De Minimis Treatment If your business model relied on ordering small batches from overseas suppliers to avoid duties, that door is closed. Factor duty rates into your landed cost calculations from the start.
Tariff Classification
Every product entering the U.S. is assigned a code under the Harmonized Tariff Schedule, which determines the duty rate. The system uses 10-digit codes organized by product category. Getting the classification right matters, because the wrong code can mean overpaying duties or, worse, underpaying and facing penalties later. Your customs broker handles classification, but understand enough about your product category to verify their work. The duty rate for the same product can vary significantly depending on country of origin, trade agreements, and current tariff policies.
Product Safety and Liability as a Reseller
Buying products wholesale to resell does not absolve you of responsibility for what those products contain, how they are labeled, or whether they meet federal safety standards. As the seller, you are part of the distribution chain, and regulators can hold you accountable.
Wholesale distributors are generally exempt from federal labeling requirements unless they are doing the packaging themselves or specifying how the product is labeled.9Office of the Law Revision Counsel. Title 15 Commerce and Trade, Chapter 39 – Fair Packaging and Labeling Program If you repackage, bundle, or private-label products, those obligations fall on you: the label must identify the product, the name and place of business of the manufacturer, packer, or distributor, and the net quantity of contents.
The Consumer Product Safety Commission requires that consumer products subject to safety rules carry a certificate of compliance. Starting July 8, 2026, importers of regulated consumer products must electronically file certificate data with CPSC as part of the customs entry process.10United States Consumer Product Safety Commission. Update: Certificates of Compliance and eFiling Children’s products face especially rigorous testing and certification requirements. If you import products under CPSC jurisdiction, verify your supplier can provide compliant certificates before committing to an order. Finding a compliance gap after a container arrives at port is an expensive problem to solve.
Even when you did not manufacture a product, selling or distributing it makes you a link in the liability chain. Under strict liability, a customer injured by a product can sue the seller regardless of whether the seller was negligent. That is why product liability insurance matters for resellers, and why small wholesale operations often pay under $1,500 per year for general liability policies that include product liability coverage.
Improving Pricing and Terms Over Time
Your first orders with a new supplier will be at list price with the least favorable terms. That is expected. What separates profitable wholesale buyers from everyone else is how aggressively they improve those terms over the first year.
Volume commitments are the most straightforward lever. If you can guarantee a certain order quantity per month or quarter, most suppliers will reduce your per-unit price. Even a modest commitment to regular purchasing gives the supplier forecasting certainty they value. Ask specifically about tiered pricing: many wholesalers have breakpoints where the unit cost drops at 500, 1,000, or 5,000 units, but they will not volunteer those numbers unless you ask.
Early payment is the other underused tool. If your supplier offers 2/10 Net 30 terms and you have the cash to pay within ten days, take the discount every time. Two percent off every invoice, twelve months a year, compounds into a meaningful reduction in your cost of goods sold. Beyond the direct savings, consistently paying early builds the kind of supplier relationship that gets you priority allocation when inventory is tight and flexibility when you need to adjust an order last-minute. In wholesale, your reputation as a buyer is currency.