A Tax ID number is essentially a number that the government uses to identify your business activity. This includes your purchases from suppliers as well as your transactions on merchant accounts. Now, you can get a merchant account without a Tax ID number, but for simplicity, it is easier to use a Tax ID number. However, the most vital part of obtaining your Tax ID has to do with your suppliers.
For every item sold in today's world, somebody must pay sales tax on that item somewhere along the way. If you go into a gas station in Florida and buy a bag of potato chips, you will pay for the bag + 7% sales tax. You are paying the tax because when that gas station bought those chips from their supplier, they did not pay tax on those chips because they purchased them through a tax-free business-to-business transaction that allowed them to legally avoid that sales tax. Obtaining a Tax ID number will allow you to avoid that sales tax from your supplier when purchasing inventory.
Any legitimate wholesale supplier that can provide products at true wholesale prices will almost always request a Tax ID number. This is because the majority of these B2B wholesalers don't want to be bothered with collecting sales tax and pass that obligation on to their sellers, this is a completely natural process within the world of wholesale and retail - it is the responsibility of the retailer (the entity selling to the general public) to collect sales tax on items they sell.
Obtaining a Tax ID number is something that small businesses simply cannot afford to overlook. It is a very simple, free process that will start paying huge dividends for your company immediately. To learn more about obtaining a Tax ID number in your state, simply do a quick web search of something like "(your state) Tax ID Number" ex. "Florida Tax ID Number" and look for an official state page.