When you start a business, you need to apply for a Tax ID to make your company legitimate in the eyes of the law, and to avoid trouble during tax season. Here is more on applying for a tax ID number and how to do so with minimal hassle:
Tax ID for Businesses: Most new businesses need a Tax ID. If you are starting a business that will be hiring employees, you will need to file for an Employer Identification Number, or EIN, which will essentially double as your company’s tax id number.In addition to filing taxes, an EIN can be used to work with banks and even open a line of credit.
Tax ID for Individuals: For individuals, the social security number doubles as a Tax ID. People who do not have a US social security number but are working in the US as a non-resident or a resident alien, will need to apply for an ITIN or Individual Tax ID Number. The same applies for spouses or family that are claimed on a tax return. The ITIN is used exclusively for tax purposes.
Obtaining a Tax ID: Whether you are applying for an individual or company, getting your tax number online is the fastest and often easiest option. You can also submit the necessary forms by fax or mail. However, submitting by either fax or mail means waiting about a month for your Tax ID to be mailed. If you are applying for an EIN, you’ll need to submit form SS-4 and will also need to determine the entity of your business. If you are applying for an individual ITIN, you will need to fill out Form W7.
When it comes to taxes, it is important to comply with federal regulations and have the appropriate forms in order. If you need a Tax ID, it is best to apply well before tax season to help avoid stress.