If you own a business in Fuquay Varina, or anywhere in the United States, a federal tax ID is a legal requirement for conducting any operations. The nine-digit number is assigned to your business by the IRS to classify how your business is taxed, and that number is also used by federal agencies to determine identification and also applicable regulations. Your federal tax ID is also known as your employer identification number (EIN) and is different from your state tax ID number.
Virtually all operating businesses must apply for a tax id number (TIN) while establishing their business entity. Any business or organization with paid employees must file with an EIN as that is how your employees will identify your business on their taxes. However, not all businesses and organizations have to have an identification number; there are a few exceptions.
Sole proprietors can use their social security number or individual taxpayer identification number (ITIN) to identify their business when they prepare taxes. Because there is no separation between personal and business income, and you file your business taxes with your personal returns, there’s no need for a separate number. However, any sole proprietorship with employees, not including independent contractors, must file for an identification number.
Like sole proprietors, a single member limited liability corporation can use his or her social security number.
Tax exempt organizations in Fuquay-Varina should apply or file for a Tax ID number, even if there are no paid employees. There may be situations that require an EIN, and it’s good to have it ready and available.
There is no fee to apply for your tax ID number, though there may be fees involved in establishing your business entity. Also, your ID never expires. To apply for a Federal Tax ID number, fill out IRS Form SS-4, available on the IRS website. However, before you apply, we do recommend working with an experienced Fuquay-Varina accountant to walk you through the application and make sure everything is filled out correctly. If there are mistakes or there is incorrect information, it can hold up the application process by weeks.
When you’re registering your business entity, it can be overwhelming and confusing, and once established, it’s difficult to make changes. Working with an experienced CPA to walk you through the process and provide advice can help you get your business started on the right foot.
At C.E.Thorn, CPA, PLLC, we have over 30 years of experience in small business accounting, and businesses around the area depend on our financial services to help them prevent costly tax issues. To learn more about how we can assist your small business, contact our team today by completing the online contact form or by calling 919-420-0092.