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Short answer: A wholesale business buys goods in volume and sells them on to other businesses, such as retailers, clinics or laboratories, instead of to the end user. To start one in the US, you work through the general business setup steps the Small Business Administration (SBA) lists, get an EIN from the IRS, and then, if you will handle drugs or medical devices, check the FDA rules for that product class. This page is general business information, not legal or tax advice.
What a wholesale business is
A wholesaler sits between the maker of a product and the business that uses or resells it. The customer is another organisation, which is why supplier paperwork matters more than storefront marketing. For laboratories and clinics, the wholesale side is where purchase orders, supplier documents and resale arrangements live. Related pages cover the differences between a medical supply wholesaler, distributor and manufacturer and the buyer’s side of wholesale procurement; this page covers the seller’s setup sequence.
Wholesale business model
The model is defined by who buys and who sells. The wholesaler buys from manufacturers or other suppliers, and the buyer is a business. The US device regulation shows why that line matters: under 21 CFR 807.65(e), “pharmacies, surgical supply outlets, or other similar retail establishments making final delivery or sale to the ultimate user” are listed among the classes exempt from device establishment registration. A business that sells to other businesses is not described by that retail wording, so its status has to be checked separately (see the FDA section below).
Wholesale vs retail in one line
Retail makes the final sale to the ultimate user. Wholesale sells to a business that will use it or sell it on. Regulators draw the same distinction, which is why the label you choose affects your checks.
How to start a wholesale business
The SBA’s “Launch your business” guide lists eight steps. They apply to any new business, wholesale included. In order:
- Pick your business location.
- Choose a business structure.
- Choose your business name.
- Register your business.
- Get federal and state tax ID numbers.
- Apply for licenses and permits.
- Open a business bank account.
- Get business insurance.
The tax ID step: the EIN
The IRS says businesses and organisations “need an EIN to manage their taxes,” including when hiring employees, operating a partnership or corporation, or paying sales or excise taxes. It also states “You never have to pay a fee for an EIN.” The online application is for organisations whose principal place of business is in the US or its territories, and it asks for the responsible party’s SSN or ITIN. State registration and resale paperwork are separate; the guides on what a wholesale license really is and on a resale certificate for medical supply distributors walk through those.
Extra checks for medical and laboratory products
The SBA steps are the same for every wholesaler. What changes is the product class. The table below summarises what FDA’s pages and the CFR state for each class.
| Product class | What the source says | Source |
|---|---|---|
| Prescription drugs | Under the Drug Supply Chain Security Act, wholesale distributors and third-party logistics providers report licensure and other information to FDA annually; FDA provides a DSCSA portal for exchanging information with trading partners. | FDA, DSCSA page |
| Medical devices | Owners or operators of establishments involved in the production and distribution of medical devices register annually, and establishments that must register also list their devices. Whether a particular wholesaler must register is decided on FDA’s “Who Must Register, List and Pay the Fee” page. | FDA, Device Registration and Listing |
| Retail final sale to the user | Pharmacies, surgical supply outlets and similar retail establishments making final delivery or sale to the ultimate user are in the exempt list. | 21 CFR 807.65(e) |
For the term itself, see FDA-registered establishment. For goods brought in from abroad, see importing medical devices into the US.
Documents to ask a supplier for
Once your own setup is in place, the next job is verifying the businesses you buy from. A practical order is to confirm the supplier’s legal identity first, then any product-class registration that applies to what they sell, then the paperwork for the sale itself. The vendor onboarding documentation checklist sets out the documents to request.
Common misunderstandings
- “There is one wholesale license.” The SBA lists licenses and permits as a single step whose content depends on your activities and location; it is not one national document.
- “An EIN costs money.” The IRS states there is never a fee for an EIN.
- “Any medical-goods wholesaler is exempt from FDA rules.” The retail exemption in 21 CFR 807.65(e) describes final sale to the ultimate user, and FDA’s registration page refers the question of who must register to its “Who Must Register” guidance.
- “The SBA has ten steps.” The current SBA page lists eight.
FAQ
How to start a wholesale business?
Work through the SBA’s eight launch steps (location, structure, name, registration, federal and state tax IDs, licenses and permits, bank account, insurance), get an EIN from the IRS, and then check the FDA rules for the product class you plan to sell. Details for the medical and laboratory case are in the sections above.
What is the wholesale business model?
The wholesaler buys goods in volume from suppliers and sells them to other businesses, not to the end user.
Do I need an EIN for a wholesale business?
The IRS says businesses need an EIN to manage taxes, including when paying sales or excise taxes or operating a partnership or corporation.
Sources
- US Small Business Administration, Launch your business: sba.gov/business-guide/10-steps-start-your-business (checked 2026-11-01).
- IRS, Apply for an Employer Identification Number (EIN) online: irs.gov (checked 2026-11-01).
- FDA, Drug Supply Chain Security Act (DSCSA): fda.gov (checked 2026-11-01).
- FDA, Device Registration and Listing: fda.gov (checked 2026-11-01).
- 21 CFR 807.65, Exemptions for device establishments: law.cornell.edu (checked 2026-11-01).
