Advice

How To Obtain Federal and State Tax IDs For Your Small Business

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?

State Tax ID

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:

Business owner name
Business address
Phone number
Description of business activities
Federal tax ID (optional since this number is used to report state taxes)

Federal Tax ID

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:

Open business checking, savings, or investment accounts
File taxes for the business
Complete payroll for employees, if applicable
Obtain lines of credit and credit cards, and build credit for your business
Apply for applicable business licenses

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.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration.

Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law.

Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others.

Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.