To lawfully run a restaurant in the United States, you must get a federal Employer Identification Number (FEIN) for federal tax reasons and other purposes. EIN is essential for any business, especially when you have staff and need to obtain various permits or licences.
If you are looking for a proper guide on obtaining the EIN for your restaurant in the US, you can find everything from the application to EIN usage and other details here.
Tax ID (EIN) application for a Restaurant
When you open a restaurant in the US, the first task is to register it as a legal entity and then acquire a tax ID number; however, it depends on what type of business entity your restaurant will be.
However, you should choose your restaurant’s company structure and register it as a legal entity with the appropriate state body before applying for a tax ID (EIN). You can decide the business structure based on what works best for you.
For example, you can run it as a sole proprietorship if you are the only owner, or as a partnership if there are other owners. The IRS allows the federal EIN application through various means, including mail, fax, or online.
The easiest and fastest is the online application, which is available on weekdays between 7 AM to 10 PM Eastern time. This tool was initiated to provide a convenient or fastest way for businesses or entities to obtain the tax ID or financial identity.
Steps to apply online for the Tax ID (EIN) for the restaurant
To apply online for the tax ID (EIN) for your restaurant, you should first prepare the following information:
- Get your restaurant registered with the state authority it is located
- See its business entity depending on the taxes and other aspects
- Gather your SSN or ITIN as a responsible party
- You will be a third-party designee if you are filing for an EIN on your client’s behalf, and you will require a client-signed authorization letter.
You may now proceed to apply for the tax ID number in a matter of minutes by following the EIN online application steps:
- First, go to the IRS EIN assistant page and read the instructions.
- Next, click the Continue application page, and select your restaurant business entity type.
- Now, enter your restaurant details, locations, name, employee number, etc.
- The SSN or ITIN of the accountable person, who is in charge of the restaurant’s assets, is to be entered on the next page.
- Next, enter all other details about your business and submit the EIN online application.
After the application is submitted, the IRS will verify the details based on the legal entity registration and if everything is right, the number will be issued within a few hours and you can get it online or request them to send it through mail.
What is the purpose of an EIN for restaurants?
When you have your unique EIN for your restaurant business, you can use it for the following purposes:
- Hire the staff, from chefs to waiters and waitresses
- You can open a bank account in the name of the restaurant
- You can file the federal or state taxes (though for state taxes, you may have to obtain the state tax ID number)
- You can pay the sales tax, excise duty, alcohol, and tobacco taxes.
- You can withhold or pay the payroll taxes from the wages of the employees or administer the retirement plans, and others.
What other permits or licenses would you require for the restaurant?
If you are opening a restaurant in the US and you acquire the tax ID (EIN) number, you would need the other licenses and permits to run your restaurant smoothly, such as:
- Business License (fee would be around $50 to $7000, depending on the restaurant size) from the state-specific authority or Small Business Administration.
- Food Service License from the US Food and Drug Administration to ensure your restaurant meets the public safety or health standards.
- If you have liquor in your restaurants, you would need to obtain a Liquor License from the Alcohol Beverage Control Board, as it is not covered in a food service license.
- Food handler’s Permit ensures your staff has taken all the food safety measures into consideration.
- Remitting or collecting sales tax for products and services following state laws requires a sales tax permit.
Apart from that, you may need other permits as well, like a music license, a resale permit, or others that you can obtain based on your restaurant and the services you offer.
Starting the restaurant business does not just involve good food and staff; you need to ensure it complies with all the state and federal regulations and keep all the paperwork done.
