Starting a business doesn’t have to be a complicated process. Once your business has been registered, you can apply for an IRS Tax ID. Once you have an IRS Tax ID, you can begin hiring employees, applying for permits, renting out real estate and (of course) paying your taxes. The easiest way to get an IRS Tax ID is to fill out an online application.
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Steps to apply for an IRS Tax ID
- Prepare Business Owner Information
- Apply for a Tax ID Number Online
- Apply for a Tax ID Number by Phone, Mail or Fax
- Why Do I Need to Obtain an IRS Tax ID Number?
- How Do I Get a Tax ID Number?
1. Prepare Business Owner Information
If you’re registering a business you own, your first step will be to prepare your own information. If you don’t have a Social Security number, you’ll need an individual taxpayer identification number. You should also be prepared to submit your full legal name, date of birth, and current mailing address.
If you’re registering someone else’s business, you will need to instead submit information for the responsible party. Generally, the responsible party of a business is an owner or partner in the business.
2. Apply for a Tax ID Number Online
Why should you apply for a Tax ID Number online? Applying for a Tax ID Number online is faster. Once your application has been submitted, it should be processed in about an hour. Once you receive your Tax ID Number, you can begin using it.
Online processing is largely automated, which means you won’t need to wait for business hours or wait until processing is completed. When applications need to be processed by hand, it can be more difficult to determine how long they will take to be processed.
To apply for a tax ID (EIN) number online, you want to have your basic business information on hand:
- Business Name as is or will be registered with your state.
- Responsible Party information including:
- Legal Name
- Social Security Number
- Physical Business Address
- Contact Phone Number
3. Apply for a Tax ID Number by Phone, Mail or Fax
You can get a Tax ID Number through phone, mail, fax or internet. In order of processing speed, here are the pros and cons of each solution:
- Phone. With the exception of online application processing, phone processing is the most expedient method. You may call in during business hours and have a Tax ID Number in hand by the end of the conversation. However, the wait times can be highly variable, and you will need to stay on the line while you’re waiting.
- Fax. While a phone call may take a few hours, a fax may take a few days. To apply by fax, you’ll need to be able to send in your SS-4 application through a fax machine. Your Tax ID Number will be received via fax within a few business days. Applying by fax is a fairly fast process, but it can be unreliable because the technology is old. Few people currently have a fax machine.
- Mail. The longest method of all, mail takes up to six weeks to process. While the process of mailing in an application is a simple one, the lengthy wait means that a business may need to wait to complete important business functions. Further, it may take a while to find out whether something is wrong with the application.
Any of the above methods will eventually get you an IRS Tax ID: It’s a matter of speed and convenience.
4. Why Do I Need to Obtain an IRS Tax ID Number?
An IRS Tax ID Number will be used to identify your business to the government. When you apply for a liquor or food service permit, you will need an IRS Tax ID Number. When you hire employees and put them on payroll, you will need an IRS Tax ID Number. When you need to pay employment and income taxes, you’ll also need an IRS Tax ID Number.
In addition to identifying your business with the government, an IRS Tax ID is also frequently used to identify your business to other private enterprises and banking institutions. That means an IRS Tax ID is going to be necessary to get a bank account, get a business loan, or open a credit card. An IRS Tax ID may also be necessary to rent commercial office space or sign up as a wholesale distributor. Some businesses are able to function without an IRS Tax ID. A sole proprietorship that does not have any employees can frequently function only with a Social Security number. This is rare, however; most businesses are going to need an IRS Tax ID fairly early on in their development.
5. How Do I Get a Tax ID Number?
An easy way to get a Tax ID Number for a new business is to collect all of your information and forward it to a Tax ID Service. Tax ID Services are specialized, online services that provide businesses with all of the IDs they need in order to operate their business. A Tax ID Service can produce a Tax ID Number in an hour using a simple, online application process. As long as you have basic information about the company, the company’s structure, and the company’s owner, you should be able to apply for a Tax ID online and get a Tax ID returned quickly.
Getting a Tax ID number is essential for any business, as it allows you to separate the business from your own personal finances and taxes. By applying online, you can get your Tax ID number in hand faster and with fewer potential complications. If you want to start doing business right now, contact a Tax ID service and you can get started.