Your business EIN is your Employer Identification Number. It works much like your social security number, but it is for your business. In most cases, you will also need state tax ID and federal tax ID numbers to identify your business for tax purposes. These numbers are what the government uses so you can pay your business’ state and federal taxes. They are also required if you plan to hire staff, need licenses or permits, and open a business bank account.
Here are some frequently asked questions about getting an EIN.
How Much Does it Cost to Apply for an EIN?
The application for your EIN is free.
When Should I Apply for an EIN?
You should apply for your business EIN as soon as your business is registered.
Where Do I Apply for My EIN?
Applications are made using the IRS’s assistance tool. You simply answer questions and provide the requested information to obtain your EIN.
My Business is a Sole Proprietorship. Do I Still Need an EIN?
No. If you don’t have employees, you use your social security number instead of an EIN.
Do I Need a Federal Tax ID Number?
Federal Tax ID is needed for businesses that do the following:
- Pay employees
- Exist as a corporation or partnership
- File tax returns for employment, excise, or alcohol, tobacco, and firearms
- Withhold taxes on income, other than wages, paid to a non-resident alien
- Use a tax-deferred pension plan (Keogh Plan)
- Work with certain types of organizations
If your business does any of the above, you’ll need to apply for your Federal Tax ID Number.
How Do I Apply for My Federal Tax ID Number?
Once you complete your EIN application, you will automatically be provided with a nine-digit federal tax ID.
Do I Ever Need to Change or Replace My EIN?
Yes. Some changes to your business necessitate changing or replacing your EIN, such as:
- A business name change
- Address changes
- Changes to your ownership setup
- Changes to your company management
- Changes to your tax status
If you experience any of these changes or others you are unsure about, speak to the IRS to determine if you must change or replace your EIN.
When Do I Need a State Tax ID Number?
There are seven states that do not have a state income tax and two others that only impose a tax on income from dividends. All others charge income taxes, the tax is based on your business structure. Tax charges vary from state to state and also have specific workers’ compensation and employment insurance. You are responsible for understanding all federal and state tax implications. Check your state’s website to determine if your business must pay state taxes. If so, you need your State Tax ID Number.
How Do I Get a State Tax ID Number?
Because it varies by state, once you confirm you do need the number in your state, you can ask them how you can apply.
These tips will make it easier to get your EIN and acquire your State and Federal Tax ID Numbers if you need them.
