What is a business tax id number

There are forms. To make things more complex, there might be federal taxes, state taxes, and local taxes. Sales taxes and income taxes. Sales tax permits, business licenses, DBA licenses, tax return forms, applications…the list goes on and on. Read more here. Its original purpose is to assign ID numbers to employers. Lots of types of businesses can apply for and receive an EIN — huge corporations, partnerships, sole proprietorships, and also little tiny Etsy businesses.

You can think of an EIN as the equivalent of a social security number, but for a non-living entity like a business.

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Each state has their own rules and regulations regarding the collection and payment of sales taxes. In most states, you can apply online and the process is free and painless. Once you receive your permit, you should have it on display in your place of business, and always bring it with you to any craft shows or fairs. Anytime you make a sale to a customer in your same state, you should be collecting sales tax.

If you want to attend a trade show or shop at certain wholesale supply websites online, you might be asked for your sales tax ID number or to show your sales tax permit. Your sales tax ID number can sometimes be referred to as your resale or reseller number. However, another state-by-state caveat — some states issue separate wholesale account numbers that you might use in similar situations instead.

For some reason, many people incorrectly assume this means EIN and frantically research how to apply for one. This ID number is usually needed to buy from wholesale suppliers, apply for craft shows, or apply for a DBA or business license. I will add that in a few states, the state will issue you a sales tax ID number that is identical to your EIN, thus causing conflicting answers and confusion for everyone. Just make sure to pay attention to what the paperwork or agency is actually asking you for.

When in doubt, just ask! It is not intended to be relied upon as legal, accounting, or tax advice.

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Does Your Business Need an Employer ID Number?

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It was very informative. I feel more at ease knowing that lots of sole proprietors have also applied for EIN. Do you have a link to apply for a sales tax ID? Hi Molle, the link would be dependent on your state. Some states require an EIN as well, and some do not. I have an EIN.

The easy way to get your EIN

For those who do not have a Social Security Number -- such as nonresidents and resident aliens -- they may need to apply for an individual taxpayer identification number ITIN , which is also nine digits. You will be asked to provide proof of your legal resident or visitor status and will have to file it through an " Acceptance Agent " authorized by the IRS. Unless you operate a sole proprietorship or an LLC with no employees, you will most likely need a tax ID number for your small business.

The best way to learn about tax ID numbers, and other aspects of business tax law, is to speak with a skilled tax attorney near you. Find your Lawyer Explore Resources For Learn About the Law. Legal Forms. Are you a Legal Professional?


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