Please have your IDs Ready
The last thing you want as a new business owner is to get in trouble with the IRS. So you certainly will want to make sure you’re able to file your taxes and to provide the correct documentation for your employees to file their taxes. In addition, registering with the government and getting the proper identification is necessary to do basic things like selling or getting licenses.
Employer ID Number & Federal Tax ID Number
Your Employer Identification Number (EIN) is your federal tax identification number. This number appears on your tax forms and W2 forms. You will need it for almost everything - opening a business bank account, filing taxes, paying employees, being a legitimate corporation or partnership, applying for business licenses and permits, etc. It’s FREE to apply for an EIN online. You will just need your name, social security number, address, and your fictitious or DBA name.
State Tax Identification Number
Most states require businesses to pay additional state taxes, 43 states in fact. Getting a state tax ID is a similar, simple process as getting a federal tax ID, but guidelines vary by state.
Only 7 states have no income tax: Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska. Tennessee and New Hampshire have income tax only on business dividends and business interest payments. Your state income tax will also vary by the type of business structures. In addition to income tax, your state tax ID also impacts business insurance for you as a business owner and for your employees.