How to Get a Tax ID Number Headache-Free

You have a new business idea. You’ve assessed the marketplace and your competition. Also, you set out the financial risks and opportunities in your business plan. You already know about a host of topics, from budgeting to marketing and sales. So you might feel a little embarrassed that you don’t know how to get a tax ID number from the Internal Revenue Service (IRS).

Before you can start making money you are going to need this federal identification number for your business. So, roll up your sleeves and quickly untangle the process and get it done.

tax id card payment

7 Need-to-Knows to Get a Tax ID Number

1. Why and When You Need a Tax ID

Whenever and wherever there are tax filing obligations, you need a tax ID number. For US citizens, your nine-digit social security number (SSN) is your personal tax ID. Non-residents without a green card who don’t qualify for an SSN from the Social Security Administration need an individual tax ID number (ITIN) from the IRS.

If you plan to launch a business, do trade shows to sell products or services, hire employees and pay wages, or open a business bank account for depositing cash or checks, you are going to be asked for an EIN — an employer tax ID number (aka a federal employer tax ID). This business equivalent to an SSN is also a nine-digit number assigned to you by the IRS so you can report business income and pay taxes

2. Eligible Business Types

You must have an SSN, ITIN, or another EIN to begin with to apply for a federal ID number for your limited liability corporation (LLC) or S or C corporation. If your venture is a nonprofit, you’ll need to know how to get a tax ID number to prove your nonprofit status when it comes to donations or volunteer activities.

Partnerships with or without non-partner employees; cooperatives owned/operated by members; and trusts and estates that are not employers per se must all have EINs, too. If you are a sole proprietor and your income and losses are reported on your personal income tax return, your SSN is your tax ID. However, applying for an EIN is sometimes recommended to separate business and personal money and avoid the risk of identity theft by giving out your social security information.

3. The Essential: Form SS-4

The IRS has resources, all free, that explain how to get a tax ID number. For employers, corporations, partnerships, trusts, estates, and nonprofits such as churches, the process starts with Form SS-4. Go to IRS.gov and download a copy of the two-page IRS Form SS-4. Digest it.

Download and read the instructions on how to complete Form SS-4 and where to mail or fax it. Once you send it in, you can expect to get your tax ID number by mail in two to four weeks.

4. Toll-Free Option

Mail, fax, and online (see below) are the best ways to get a tax ID. Apply-by-phone requirements are changing and skewed to international applicants whose principal business is in the United States.

But if you are impatient filling out paperwork or waiting weeks for a mail reply, you can call the IRS (800-829-4933). Then, inquire about having a tax ID number assigned over the telephone. Like any customer service call during business hours, there will be a wait time to talk to a person.

5. DIY Online to Expedite Matters

The fastest method is using the IRS online application. It’s a free service, and online help and explanations are available as you go. Like many online form builders, the site will time-out if you go idle for 15 minutes. So, again familiarize yourself with Form SS-4 beforehand and have all the information you need handy to complete the application in one session.

The online process will prompt you to supply the same information you would have to supply on the paper form. The difference is that once you complete the session and get a confirmation page, an EIN is issued immediately. Save or print it. Voilà! You have just successfully learned how to get a tax ID number. (An email or mail confirmation letter will follow.)

young man entering building

6. Third-Party Help

Some folks are averse to the IRS experience or too impatient to take the time to do it themselves. Or you may feel your situation is a little tricky or have extra questions, such as whether you need a tax ID number for a new subsidiary (you do!).

Commercial services experienced in registering and incorporating new businesses can complete an EIN application for you, but for a fee that may range from $50 to $70 per application. If you have the money, it may be worthwhile to go this route. The bank where you want to open a business checking account may also offer support services to show you how to get a tax ID number for the business.

7. Annual Checkup Recommended

Your business status may eventually change. If you are a sole proprietor today but plan to hire employees next year. Also, if you inherit or buy another going business, you will need to apply for a new tax ID number.

Learning how to get a tax ID number on your own, without paying a third party to do it for you, will be beneficial and save you headaches in the long run.

Points to Remember

If you are planning a startup, your value and differentiation is being an expert in your market. You don’t need to be a tax expert. But assuming your business proposition is sound, one of the first things you want to do after forming your business is learning how to get a tax ID number quickly so that you can get going on growing your business.

Good luck and returns in your new venture!

The images are from depositphotos.com.

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