Starting out as a youth in business or freelancing will require you to have a Tax ID number. It might seem complicated but I am here to explain it in simple terms for you. Let us dive into the process step by step.
What is a Tax ID Number?
Tax identification number is also known as an employer identification number (EIN) and consists of nine digits. This code is used by Internal Revenue Service (IRS) for the purpose of identifying your entity when it comes to tax matters. It can be likened to social security number only that this is for entities rather than individuals.
Why Do I Need One?
Here are a few reasons why you may need an EIN:
- It helps you open a business bank account.
- This is necessary if you want to hire workers and pay taxes on their behalf
- Establishing various business entities like corporations, partnerships etc
- You can file tax returns for your business
Even if you are self employed or sole proprietorship without any employees, using this number can help avoid having to use your personal social security number on forms.
How to Apply for an EIN
Now, this section explains how one can obtain his or her EIN. The process is direct enough through the IRS website; simply follow these steps:
Go to the IRS EIN Assistant page
Click “Begin Application”
Choose your type of business e.g., sole proprietorship, corporation…
Fill in basic details such as name, address and other important information relevant with respect to your company’s nature.
Your new EIN will be displayed by the website instantly!
An EIN costs nothing and if you have all details ready, it takes 5-10 minutes online from start to finish.
If faxing, mailing or calling works better for you then feel free because they offer those options too. Nevertheless, applying online should prove easier anyway.
Tips and Tricks
Some tips that would make getting your E.I.N an easy ride.
- Remember that regardless of the number of shops you have, one EIN is sufficient.
- Never use a previously owner’s EIN.
- Keep your EIN info safe and private.
- Inform the IRS if you change something in your business data
When to Get Your EIN
Generally, it is best to get your EIN early on in the start-up process. These are a few examples:
- Do it before opening a business account in any bank
- It should be gotten when applying for permits and licenses
- Get it prior to filing first business tax return
However, don’t worry if you didn’t acquire one from the onset. You can apply for an E.I.N at any time.
State Tax IDs
In addition to the federal IRS’ EIN, various states may require their own state tax ID or business registration number. What each state wants is different.
Some use the same numbers for state and federal purposes. Others make one complete another application form for state tax identification numbers.
Contact your respective department of revenue in your state. Most allow online new company registrations with a free T.I.N issuance facility included therein.
The Bottom Line
An Employer Identification Numbers (E.I.Ns) are integral parts of any serious establishment. Filing for an online originality check on text by means of available software which helps improving your writing work might appear simple but it comes at no cost according to me as far as I am concerned!
Discover: How To Make A Long Flight More Comfortable
Having paid taxes without faltering throughout my entire career so far is quite an achievement, I must admit; however, I never found paying taxes interesting or exciting like most people do who pay taxes every day. Take 10 minutes to apply today!