Federal Tax ID

Posted by Logan Marshall on August 25 in 0. PreBusiness Considerations |

The Federal Tax ID.

If you are in the process of setting up a new business then there is a very good chance that you will require a Federal Tax ID, otherwise known as an Employer Identification Number or EIN. This is essentially a unique ID that is given your company and used for many purposes including tax and benefits. If you require a Federal Tax ID then operating any business without one is a federal offence and can see you fined or, worse still, your business temporarily or permanently closed.

Obtaining a Federal Tax ID.

Gone are the days of filling in form after form by hand, because you are now able to fill in the Federal Tax ID form online. You should have a Federal Tax ID in time for making your first return or deposit and not having one at this point can cause lengthy delays or worse. The amount of time it takes to receive your Federal Tax ID depends on whether you apply online, by fax or by mail and can range from a week or less to a month or more. The quickest way is online or by fax (including a return fax number). If you do happen to file a claim before you receive your ID you can write on your form the date you applied for it.

Do I have to have a Federal Tax ID?

In short, the answer is probably yes, however in practise you may not need one. If you employ any staff then you will need a Federal Tax ID or if your company is a corporate business or partnership you will also be required to have one. The IRS has more details on exactly who does and who does not require a Federal Tax ID and if you are unsure you should find out as soon as possible.

Other information on Federal Tax ID.

A change in company structure or director will usually require that you apply for a new Federal Tax ID. Similarly you cannot transfer a Federal Tax ID from one company to another; again you need to reapply in order to get a new one. If you provide health care plans for your employers you will need to provide your Federal Tax ID, so you should apply for one immediately instead of waiting until it’s nearer tax return date.

The IRS has just about all the information you could possibly need regarding the Federal Tax ID.

In particular they have a very useful PDF document that gives you lots of information – http://www.irs.gov/pub/irs-pdf/p1635.pdf.

http://www.irs.gov/businesses/small/article/0,,id=97872,00.html – A checklist to determine whether you need a Federal Tax ID or not.

http://www.irs.gov/businesses/small/article/0,,id=102767,00.html – Online application for your ID.

http://aspe.hhs.gov/admnsimp/faqemp.htm – Government website with lots of information and FAQ on the Federal Tax ID. If you have any questions this site will probably have the answers.

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