WHAT IS A TAX ID NUMBER
Tax Id Number Information:
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A tax id number is a number that a government issues to identify a business for various tax purposes.
There are five main tax id numbers:
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A federal tax id number
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A State Employer Tax Id Number
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A Sales Tax Id Number
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A County Tax Id Number
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A City Tax Id Number
A federal tax id number is issued primarily to partnerships, corporations, and employers. A sole owner can obtain one and use it as a business tax id number to be used in applications. For example, you are starting "Online King" an ebay online business and you have an employee. You will need a federal tax id ( as well as a state employer number ) to pay employment tax. Partnerships will need one because the partnership must be indentified independently from its partners and corporations need it as a corporation id but it can also be used as an employer number for the corporation as well as the partnership.
A State Employer Number ( as well as a federal tax id number ) is required for all businesses that have or will soon hire employees .
A sales tax id number is required in two cases:
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If you are a wholesaler so you can sell without charging taxes.
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If you are a retailer that wants to buy wholesale or sell online and collect taxes.
A County Sales Tax Id is required in some states for the purpose mentioned in the state sales tax id case
A City Tax Id or business tax receipt registration number is required from most cities in the United States.
If You Are Starting a Business, You Need The Following Tax Id Numbers:
- All businesses need a business tax id registration number also called a business license.
- All businesses that want to buy wholesale ( i.e., buy without paying taxes), or sell retail and collect taxes, need a State Sales Tax Id Number also called a seller's permit or resale tax id number.
- All businesses that have employees, need a federal tax id number ( also called an irs number) and a state employer tax id number.
- All businesses are advised to get a federal tax id number and use it as a business id number. Note that a federal tax id number is also a federal employer number as well as a business id number.
- All corporations, partnerships, and llcs, are required to get a federal tax id number to use as a business tax id ( though, even sole proprietors can use it as a business tax id number if they so choose).