08/ 20/ 2004
by Jeffrey Moses
Most small businesses should have a federal tax ID number -- even online businesses and businesses that have no employees. Applying for and receiving a tax ID number -- interchangeably called Employer Identification Number (EIN) -- is easy and relatively quick, so even if your company is currently using the owner's Social Security number as identification on government forms and official correspondence, you should consider applying for a tax ID number.
You need a federal tax ID number if:
- A federal tax ID number is required by your financial institution for opening a business account
- You are charging state or local tax for your products or services
- You have employees
- Your business was founded as a partnership or corporation
- Your business offers Keogh plans, IRAs, pension plans or other retirement options
- Your business has a trust
- You do business with government entities, nonprofit organizations and other types of organizations that require suppliers to have a tax ID number
Check with your attorney, accountant or business adviser if you have questions about the necessity for your company to obtain a federal tax ID number.
Every business you operate needs its own, separate tax ID number. To apply, simply visit the IRS Web site, click "Forms and Publications" (located in the right column) and type in Form SS-4 in the search field. The interactive form that will appear on screen is simple and straightforward to use (just click on the buttons or type in the fields). By following the "next" buttons at the bottom of the screen, you can be assigned a number on the spot.
Another option is to call the IRS business division, toll-free at 800-829-4933. An IRS representative will fill out the form with you and assign a tax ID number while you're still on the phone. When calling in to the IRS, it's best to look at the form first so you'll have all information handy for the representative. There is no charge for receiving a tax ID number, either online or by phone.
If you need a federal tax ID number, it's likely you will also need a tax ID number for each state in which you do business. Check with your accountant, attorney or business adviser to determine with which states you need to file. Visit the state's Web site and either download the appropriate form to print out, or fill out the form out online if you have that option.
