Do you know which types of IDs your small business needs? Once you form and incorporate a small business, you will need to obtain federal and state tax identification numbers.
These IDs allow you to fulfill the various needs of your small business such as filing taxes and completing payroll. It is also possible your state of incorporation may require you to obtain a state ID before you file for a federal tax ID.
What’s the difference between federal and state tax IDs and how do you obtain these numbers?
Businesses use state tax IDs to hire employees and file business taxes. Small businesses must be registered with their state revenue department and any appropriate state tax agencies. This is because the state uses their state tax IDs to identify business entities for tax purposes. The biggest difference between state tax IDs and federal tax IDs Is specific states utilize state tax IDs while the IRS utilizes federal tax IDs.
To register, business owners need to provide the following information with their state’s Department of Revenue:
Federal tax IDs are also known as an employer identification number, or EIN. It is a nine-digit number the IRS issues small businesses.
This ID uniquely identifies your business for tax purposes. Think of it as a Social Security Number (SSN) for your business, except an EIN is far less sensitive to use on documentation. Like a social security number, the EIN allows small businesses to do the following:
You will only need a few pieces of information to file, including your mailing address and legal business name. You can apply online with the IRS or work with a third-party organization like MyCorporation to obtain an EIN.
Obtain tax IDs with MyCorporation. Contact MyCorporation at mycorporation.com or give us a call at 877-692-6772.
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