Is it possible to do dropshipping without being self-employed?

Nowadays, electronic commerce is one of the business activities that people find most attractive to undertake. That’s why many people ask the question we raised above. Do you think you can do dropshipping without being self-employed?

We sense that, if you have asked this question, your goal is to earn as much money as possible with the lowest financial investment possible. Once you mention the term ‘financial investment’, you know that the Tax Agency and Social Security (Inland Revenue and DWP respectively in the UK) are watching closely. These administrations will want their slice of the cake and you should be prepared to find out about the legal implications that dropshipping entails. But, before we start….

What are the advantages of doing dropshipping?

1. Low initial cost. Thanks to dropshipping, it is possible to start an online business with a low initial investment. You don’t need to buy products in advance or need large warehouses to store them in. This makes the startup costs much lower.

2. Flexibility. By not needing a fixed work space to store products or to ship your products from, you can manage your dropshipping business from any part of the world. The only thing you will need is an internet connection and a computer from which you can take control of your business.

3. Variety of products. As you won’t have a warehouse, you don’t need to worry about the inventory. For that reason, you can offer a wide variety of products in your store without having to invest large amounts of money in stock.

4. Scalability. This business model enables you to scale your business easily. As we have said, you don’t need to worry about warehousing or shipping products, so you can focus on attracting more customers and increasing your sales.

Doing dropshipping without being self-employed

It’s time to answer this big question. Is it possible to do dropshipping without being self-employed? The answer is NO!

If you are thinking that, by not being self-employed and doing dropshipping, you are going to find legal or tax advantages, you are very mistaken. Ecommerce offers lots of flexibility when it comes to starting a business, but this is subject to a legal framework, like all industries.

Conditions may vary depending on the country, so you should make sure that you meet all of the requirements to comply with the law. If you have any queries about this, we recommend you contact an expert on the issue.

You may have heard people say that if your billing doesn’t exceed €3000, you won’t need to register as self-employed, but we have to refute this statement. At the end of each year, companies must submit a statement of transactions with third parties which includes a statement of sales and purchases.

The Tax Agency (Inland Revenue in the UK) will want their part corresponding to each sale you make, while Social Security (DWP in the UK) will want you to pay your corresponding self-employment quota (equivalent to National Insurance) each month. Otherwise, it can be an expensive mistake.

In most countries, it is necessary to be self-employed or even have a commercial licence to do dropshipping. It is highly likely that most countries will ask for a tax identification number and comply with tax obligations depending on the country’s legislation.

If you don’t take the above into consideration, you will operating in an illegal situation and you may face serious sanctions or fines. For that reason, we recommend that you find out about the legislation in force in your country to avoid legal problems before you start dropshipping.

We can confirm that you DO need to be self-employed in order to do dropshipping.

Do you have queries about how to do it? Comment on the post.