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How Do I Apply For A Business Tax ID Number

If you are an employer or a business entity in the US, you need to incorporate yourself in the country’s tax system. One of the most important things you need to have is a federal tax ID number. Also known as Business Tax ID number and Employer Identification Number, it is issued by the Internal Revenue Service, IRS, to all the businesses in the US. It is a 9-digit number and works just as the Social Security number, the only difference being, it is for your business. You don’t need the Business Tax ID number just for the sake of IRS. There are many other uses of this number as well and you need it to obtain a license for your business, open a business bank account and to file the taxes levied on to the business by the federal government.

If you need help applying for a business tax id number from the IRS, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

If you’ve owned a business before, you are likely to have a Business Tax ID number. However, you need to apply for a new one in case you start a new business or are purchasing an already existing business. While the answer to the question that how do I apply for a Business Tax ID number is not difficult as the process is an easy one, you still need to be careful when it comes to getting an Employer Identification Number as it depends in the type of business you have. You, as the owner of the business, may need filing additional paperwork when you are applying for the Business Tax ID number as there are unique rules for different business structures.

Business Tax ID Number – What Is It?

Business Tax ID number, also commonly referred to as the Employer Identification Number, is a number assigned to your business by the IRS. The IRS and the federal government use this number to keep a track on your business and for tax purposes. Having a Business Tax ID number is necessary if you are starting or purchasing a business in the US. The main aim of this number is to identify who is responsible for filing tax returns of a particular business.

If you are a resident of the US and have a Social Security Number, the process of getting a Business Tax ID number for your business will not be much of a hassle. We will talk about how do I apply for a Business Tax ID number in detail in a bit, but let us first make it clear why do you need it, who needs it and who does not.

Why Do I Need To Apply For A Business Tax ID Number?

The Internal Revenue Service of the US uses the Business Tax ID number for the following purposes:

  • For identifying a business that is located in the US and its territories
  • For recognizing the business for the sake of tax documentation and receiving
  • For identifying what the employees filing taxes for a business work for

Essentially, all the businesses that have employees need to have a Business Tax ID number. However, depending on the business structure and how you file your tax returns, you may need to have a Business Tax ID number even if there are no employees working for your business.

You need to have a Business Tax ID number to file taxes for your business. You need it to open a bank account for your business, get permits for your business, to apply for business credit cards, as well as to hire employees or independent contractors for your business.

Before you go on and see how do I apply for a Business Tax ID number, you need to first know whether or not you need one.

Who Needs a Business Tax ID Number?

You need a Business Tax ID number to identify you as a business. Before you go on and find how do I apply for a Business Tax ID number, read this section. Here are some questions you need to answer. If you answer yes to any of the below mentioned questions, you need to get your business a Business Tax ID number.

  1. Do you have employees working for you?
  2. Do you file your excise, employment, tobacco, firearms or alcohol on your tax returns?
  3. Do you have a Keogh plan?
  4. Do you withhold taxes on your income that is not wages for a non-resident alien?
  5. Do you operate a partnership or a corporation?

 

Who Does Not Need A Business Tax ID Number?

Now that you know who needs to have a business tax ID number, you also need to know which business entities don’t need one. The simplest answer to the question that who does not need a Business Tax Identification number is that you don’t need one if you don’t have a business. In addition, if you own a sole proprietorship but there are no employees working for you, you do not need to apply for a Business Tax ID number.

A Business Tax Identification number helps in separating your business and personal finances. In the case of sole proprietorship, you are your owner and thus there is no need for a Business Tax ID number. However, while you are not mandated to have one, you can still opt for it to help you manage your finances well and keep your personal finances separate from the ones of your business.

Business Entities That Need A Business Tax ID Number

To help you find out if your particular business entity needs a Business Tax ID number or not, here is a breakdown of you.

  • You need to have a Business Tax ID number if you have a C or S Corporation, a Single Member LLC with employees working under you or a Multiple Member LLC
  • It is mandatory to have a Business Tax ID number for your S and C Corporations and you need to get one to start your corporation at the earliest
  • If you are forming a general or a limited partnership, you need to apply for the Business Tax ID number. If you are opening up a business in the US, there is no way you can work around without having a Business Tax ID number.
  • There is no necessity to have a Business Tax ID number in case you are a single member LLC. However, if you hire employees to work for your Single Member LLC, you will need to get a Business Tax ID number for the business.
  • Having a multiple member LLC requires you to apply for the Business Tax ID number regardless of whether or not you have or will be hiring employees in the future.
  • If you don’t have a Keogh Plan, and also do not intend to hire any employees for your business, and there is no tax of any kind you owe to the federal government on behalf of your business, then you don’t need to apply for the Business Tax ID number

What Advantages Do I Get If I Have A Business Tax ID Number?

There are a number of advantages you can enjoy as a business owner if you have a Business Tax ID number. Here are some of them discussed in detail.

Business Structure

While you can establish your business without having a Business Tax ID number, you will limit the choices for business structures you have in this case. For example, you need a Business Tax ID number if you have a partnership. Similar is the case for corporations. Having these types of businesses also gives the business owners certain advantages, such as protecting the assets of the owners from business liability and debt in the case they have a corporation. In case you have a partnership, you can also enjoy benefits if you have a Business Tax ID number such as pass-through taxation allowing you and the other partner to pay taxes at a personal and a lower rate. If you do not have a Business Tax ID number, forming a partnership or a corporation is simply not possible.

Hiring Employees

If you operate as a sole proprietor, you may not be thinking about hiring any employees. However, the moment you hire even a single employee, you will need to have a Business Tax ID number. This is needed for reporting your taxes and other important documents to the Internal Revenue Service. You will also need to have a Business Tax ID number when you are reporting your employees to the IRS or to the state.

Tax Withholding

If you have a business in the US, you need to have a Business Tax ID number to withhold taxes on your income that are other than the wages you give to the non-resident aliens. According to the IRS, a non-resident alien is a person who is not a US national or a US citizen. The person may have not passed the presence test or the green card test. If you have a Business Tax ID number, you can enjoy the privilege of having such a person work for your business.

Keogh Plan

Keogh plan is a retirement plan set up by self-employed professionals. If you are planning to incorporate one in your business, whether you are self-employed or have an unincorporated business, you cannot do it without having a Business Tax ID number.

Business Accounts

You need to have a Business Tax ID number if you are planning to open up business accounts in a bank to want to get credit cards from the bank for your business. Having separate business accounts help in keeping your personal and business finances separate from one another. It also helps in building the credit worthiness of your business allowing you to apply for loans and get them if needed.

How Do I Apply For A Business Tax ID Number?

Now that you are aware of all aspects of a Business Tax ID number and have determined that you need one, here is the answer to your question, how do I apply for a Business Tax ID number.

Step # 1: Determine if You Need a Business Tax ID Number

It has been discussed in detail above that which businesses need to have a Business Tax ID Number. If you fall in the category of the ones who need it, move on to the next step.

Step # 2: Go online on the IRS website

While you can also do it by mail, the preferred method to get your Business Tax ID number is through an online application. It allows you to handle real time application processing and is a much faster way to get approval than waiting for it through snail mail. Before you begin filling out the online application, make sure you thoroughly read the instruction so that there are no mistakes made when filling the application. You can get an online application form for all kinds and structures of businesses, recognized in their legal forms established in the US or its territories. It does not take more than 20 minutes to complete the online application. In most of the cases, the approval is almost immediate if you have provided all the needed information. Businesses that have submitted all the information in the right manner are provided with a Business Tax ID number immediately once they have submitted their online Business Tax ID number to the IRS.

You may also fill the application and then send it to the IRS through mail. However, this process is time consuming and you will also not get any confirmation whether or not it has been received by the IRS. You can also fill out the form if you like with all the information required and then mail it to the IRS. It usually takes 30 days by the IRS to create aBusiness Tax ID number for you and to mail it to the mailing address you have provided. The application is likely to be rejected in case you have made errors in the form or have provided wrong information, as all the information you provide is scrutinized, verified and validated by the IRS before issuing you a Business Tax ID number.

You can also get a Business Tax ID number by placing a call to an IRS representative.

Step # 3: Answer Questions

There are some questions you need to answer to get your business a Business Tax ID Number.

  1. The type of Business Tax ID Number you are applying for.
  2. Why you are applying for a Business Tax ID Number
  3. Your name
  4. Your Social Security Number

Now that you have provided all the information, you can submit it for further processing.

Once you complete all the sections of the online application, you will be given a new Business Tax ID Number generated by the system. You can start using this number immediately. Do not lose your Business Tax ID Number. Write it down somewhere so you can look it up when needed. You will receive a mailed copy of the Business Tax ID Number to your mailing address in about 4 weeks.

Conclusion

Now that you know the answer to how do I apply for a Business Tax ID Number, do not leave this process hanging for too long. Getting a Business Tax ID Number will help you keep all your business and personal finances separate from one another. Now that you have your Business Tax ID Number, you can easily file for and pay the taxes owed to the federal government of the US by your business. It is important to know that the process of getting a Business Tax ID Number is free. The Internal Revenue Service does not charge anything for giving you a Business Tax ID Number. Therefore, do not fall into the scams of people who offer you to get you a Business Tax ID Number for some amount. It is a simple process that can be easily completed online within a matter of about half an hour. You know your business the best and you should be the one to do it. Now that you know how do I apply for a Business Tax ID Number, fill in the application to get a Business Tax ID Number and all the benefits associated with it.

If you need help applying for a business tax id number from the IRS, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

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