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The Curious Bag
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A tax ID number is known as an employer identification number or a federal tax identification number. Certain sole proprietorships might not need a tax ID number, but LLCs, partnerships, corporations and any businesses with employees must obtain a tax ID number.
Significance
Every business must pay federal taxes. In addition, most businesses have to pay taxes in their respective state and county. Many businesses are required to register with the Secretary of State, county clerk's office and the IRS.
Function
When you register your business with the IRS, and the appropriate state and local regulating agencies, you'll be issued a tax ID number for your business. A tax ID number is used by government agencies and other businesses to identify your business.
Considerations
You'll need your tax ID number to perform tasks such as opening a business bank account, ordering goods from certain wholesale companies and filing your business tax return.
Getting a Tax ID Number
You can apply for a tax ID number online on websites such as irs.gov and business.gov. There are no costs to obtain a tax ID number. If you prefer, you can fill out form SS-4 and fax or mail it to the IRS.
Time Frame
If you apply for your EIN online, you'll be able to use it immediately. But it takes two weeks for your EIN to be permanently placed in IRS files.
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