When you run a restaurant, you’re busy writing menus, perfecting dishes, supervising staff, keeping customers happy, and juggling countless other tasks. On top of that long to-do list, you also have to manage your restaurant’s tax and banking needs, and generally, you need a tax ID called an Employer Identification Number (EIN) to handle everything. Wondering what is a tax ID (EIN) number? Trying to figure out why does a restaurant need a tax ID (EIN) number? Need help getting an EIN for your restaurant? Then, keep reading to learn the essentials.
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Steps to Obtain a Tax ID (EIN) Number for a Restaurant
- What is a Tax ID (EIN) Number?
- Why Does a Restaurant Need a Tax ID (EIN) Number?
- How to Get a Tax ID (EIN) Number for a Restaurant Online
- How to Get a Tax ID (EIN) Number for a Restaurant through Mail or Fax
- Is an EIN Number the Same as a Tax ID?
- How Long Does It Take to Get a Tax ID (EIN) Number for a Restaurant Business?
1. What is a Tax ID (EIN) Number?
A tax ID (EIN) number is a special number that identifies your business to the government or other entities. Restaurants may have similar names or other identifiers, and because of that if you used the restaurant’s name on tax and banking documents, there is a risk that your business might get confused with other businesses. To cut down on confusion and mistakes, the government issues nine-digit tax ID numbers. These numbers are called Employer Identification Numbers because they are used by employers on payroll tax forms, but they are also used in a variety of other situations.
2. Why Does a Restaurant Need a Tax ID (EIN) Number?
As indicated above, your restaurant needs a tax ID (EIN) number if you plan to hire employees, but you may be wondering about other answers to the question, “Why does a restaurant need a tax ID (EIN) number?” Whether you have employees or not, your restaurant needs an EIN for the following purposes:
- To withhold taxes from independent contractors who aren’t citizens or residents
- To file excise tax or alcohol, tobacco, and firearms tax returns
- To start a pension plan for yourself or your employees
- To open bank accounts
- To take out loans in your restaurant’s name
Your restaurant also needs an EIN if it is a single member limited liability company (LLC) or an S-corporation. Additionally, if you purchase a restaurant that doesn’t have an EIN, you need to obtain an EIN, and similarly, if you change the business structure of your restaurant (for instance, switching from a sole proprietorship to a partnership or from a partnership to a corporation), you also need to obtain an EIN.
3. How to Get a Tax ID (EIN) Number for a Restaurant Online
Now that you know how your restaurant is going to use an EIN, you are probably wondering how to get a tax ID (EIN) number for a restaurant online. To get started, find a tax ID obtainment service with an online portal. Then, gather the following pieces of information about your restaurant and get ready to pop these details into your online application:
- Name of restaurant
- Doing business as (DBA) name of restaurant if applicable
- Responsible party’s name (Typically, that needs to be the owner of the restaurant, not just a manager or employee. If the restaurant is owned by a separate corporation or partnership, you may be able to use its details)
- Tax ID number such as Social Security Number (SSN), Individual Tax Identification Number (ITIN), or EIN of the responsible entity
- Address and contact details for the restaurant and the responsible party
- Business structure (Sole proprietorship, partnership, corporation, non-profit organization, etc)
- Number of employees
- Estimate of whether the restaurant’s annual payroll taxes are going to be above or below $1000
- Last date of the restaurant’s accounting year
- Reason you’re applying for an EIN
- Principal business activity (You only need to specify accomodation and food service. You don’t need to be more specific than that.)
- Type of products or services you sell (In this category, you can be more specific and note the type of food or if you provide services such as catering.)
If you have obtained an EIN in the past, you also need to include that number on the application. Note that in most cases, you can only obtain a single EIN per day.
Once you’re ready to apply for your Tax ID (EIN) Number you can submit your application online.
4. How to Get a Tax ID (EIN) Number for a Restaurant through Mail or Fax
If you don’t have access to the internet or if you don’t want to apply online for any reason, you may be curious about how to get a tax ID (EIN) number for a restaurant through mail or fax. With these options, you need to print out a paper application, and then, you need to complete the application with all the restaurant details specified above.
When you are done, simply mail or fax the application to the address or fax number listed on the form. Then, sit back and wait. Unfortunately, these application options take significantly longer than applying for an EIN online.
5. Is an EIN Number the Same as a Tax ID?
Is an EIN number the same as a tax ID? The answer is yes. An EIN is a federal tax ID number for your business. Usually, people refer to this number as an EIN, but you may also hear them use the phrases “tax ID” or “federal tax ID”. Depending on your situation, you may need a state tax ID, and the exact name of that number varies from state to state.
6. How Long Does It Take to Get a Tax ID (EIN) Number for a Restaurant Business?
Finally, most restaurant owners want to know how long does it take to get a tax ID (EIN) number for a restaurant business. The timing depends on the application method you choose. Applying for an EIN for your restaurant online is the fastest option, and generally, you receive your number the day of application.
If you apply over fax, you should get your restaurant’s EIN within about four business days. Remember to make sure to put in a return fax number for your restaurant. To be on the safe side, you may want to put the number on the application and on the cover sheet. Without a fax number, the government has to mail your EIN which can add to the time involved. Mailed applications take about four to six weeks to process so you should only choose this option if you have lots of time to spare.