How to Get a Business Tax ID
Are you a business that employs workers, withholds taxes or operates as a corporation or partnership? If so, the Internal Revenue Service (IRS) agency requires you to get an Employee Identification Number (EIN), also referred to as your business tax ID number. Just like your social security number, each EIN is unique. This number allows the IRS to identify your business and requires you to provide all your tax documents and forms on it.
Fortunately, the IRS makes it really simple to obtain a new EIN. Just follow these four steps to obtain your business tax ID number.
Determine if you need an EIN
As stated before, if your business employs, withholds taxes on the wages and salaries or operates your business as a corporation or partnership, the IRS will require you to get an EIN number. An EIN is also needed for estates, trusts and non-profit organizations to name just a few.
If you operate a sole proprietorship you can still obtain an EIN and use it in the same way even though it’s only required if you have employees.
Apply For Your EIN
While you are able to apply for EIN by fax, phone or mail, the IRS prefers that you apply online. You can receive your EIN right away when you complete a short application online. Go the IRS website to access the EIN Assistant page and click on “Begin Application” at the bottom to start your application process.
Answer Five Questions
It will first ask you to select the type of EIN you are applying for such as a sole proprietorship, corporation, LLC, partnership or estate. Then you need to choose the option that best describes why you are applying for a new EIN. This can be to start a new business, for banking purposed or for a range of other reasons. The online questionnaire then requests your Social Security number before you can finish your application.
Save The Document With Your EIN
After all sections of the application are completed, the system will generate you a new EIN that you can start using immediately. You will receive an official IRS document that confirms your application was successful and provides your EIN. Save a copy on your computer and print one out for your records.
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NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.
How Much Does It Cost to Get a Tax ID Number for a Business?
Some online companies that provide incorporation services also include a service for obtaining an EIN and often charge $75 or more for it. However, you can also apply for EIN number for free by yourself. To apply, all you need to do is fill out IRS form SS-4 or file online. The IRS does not charge any filing fee to obtain an EIN or business tax ID number.
Do You Have to Have a Business License to Get a Tax ID Number?
Getting a business license and taxpayer identification number or employer identification number are two important basic requirements when starting a new business. However, they have very little to do with one another. In many jurisdictions, you could get either one first or go for both at the same time. In other places, you might have to start with the TIN or EIN before you get a business license.