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How to Get a Tax ID for Small Businesses

Last editedNov 20212 min read

Any small business faces a host of challenges when they’re first starting up. Not only do you have to create a whole business strategy and marketing plan, but you also need to jump through certain hoops to make sure you comply with all the legal and tax regulations. Getting a tax number for a business is one of the most important steps to ensure you’re paying the appropriate amount of tax.

Even small businesses will need to get their tax ID, which is also known as an Employer Identification Number (EID). This may also be used by self-employed people for certain tax or business reasons, whereas other freelancers may choose to just use their social security number. However, if you’re a business carrying out certain activities then it’s a requirement. Read on to find out more about how to get a tax ID number for small businesses.

What is a tax ID?

As previously mentioned, tax ID is another way of saying Employer Identification Number, and is a requirement for most businesses. For example, a tax ID is necessary for any of the following activities:

  • Opening business bank accounts. The bank will use your EIN to track your company’s activities.

  • Hiring employees. When you are filling out forms such as the W9, you will be required to input your tax ID number.

  • Paying federal taxes as a small business. When you pay your taxes to the federal government, your EIN acts like your federal tax ID number.

  • Operating as a corporation or partnership.

  • Acquiring licenses and permits. Any permits that you acquire from the government will require you to submit your tax ID number as part of the application.

As you can see, it’s likely that any small business will require a tax ID. For sole proprietorships, which are situations in which the business and the owner are the same entity, getting a tax number for the business may not be strictly necessary. Especially if you do not plan to hire employees, you may feel that this is not in your interest.

However, it can be beneficial to get an EIN in any case. These allow you to open your own 401(k) plan for tax-advantaged retirement savings, and it opens you up to the possibility of hiring employees in the future.

Preparing to get a tax ID number for small businesses

Getting a tax number for a business shouldn’t be too difficult, but there are certain things that you need to prepare beforehand. For example, you will need to have information on the business owner or a registered agent of the business, including their full name, social security number, and mailing address. These will be used to contact the owner if there are any issues with the process.

To get a tax ID for small businesses, you will also need to provide the name of the business, its mailing address, and the way that it was formed. In addition, you will have to give a justification for why you are applying for an EIN number. For example, you might say that the company was just formed or is being restructured, or perhaps that you are hiring employees or opening bank accounts.

How to apply for a small business tax ID number

There are a number of different ways that you can get a tax ID number for small businesses. The fastest and easiest way to do this is online. After filling out the online form you can expect to receive your new tax number by email within an hour.

If you prefer, you can also submit your application by mail or fax. It’s unlikely that you will still be using a fax machine, but if you do choose this method then it’s important to make sure you can also receive information from that fax machine too.

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