IRS Business Registration: Everything You Need to Know
IRS business registration involves applying for an Employer Identification Number (EIN) which will allow you to hire employees and open a business bank account.3 min read
IRS business registration involves applying for an Employer Identification Number (EIN). In addition to allowing the IRS to track the activities of your business, your EIN will allow you accomplish important tasks such as hiring employees and opening a business bank account.
Register with the IRS
Obtaining an EIN formally registers your business with the IRS. Although acquiring this number isn't the first step in starting your business, it is one of the most important.
If you are the sole proprietor of a small business, you don't necessarily need an EIN. That said, applying for this number can be very advantageous, and already having this number will make it much easier to expand your company. Should you decide not to apply for an EIN, you can use your Social Security Number to pay your business taxes.
Several types of business entities are legally required by the IRS to have an identification number:
- Limited liability companies
There are a few other issues that may require you to obtain an EIN. For example, if your business withholds taxes for income that doesn't count as wages, you'll need an EIN. You will also need an EIN if you file an employment tax return or excise tax return. One of the biggest benefits of having an EIN is that it will make it easier for you to keep your business finances and personal finances separate.
How to Get Your EIN
There are several different ways that you can obtain your EIN from the IRS. First, you can apply for your tax ID via fax. You can complete Form SS-4 with the appropriate information and then fax the form directly to the IRS. The IRS will review your form and will determine if you actually need an EIN. If the IRS decides that your business does need a federal tax ID number, they will assign you a number based on your entity type.
If you include a return fax number on your application, the IRS will fax your EIN in 4 business days. It is also possible to acquire an EIN by mail. You should be aware that if you file by mail, you will need to wait four weeks after your application gets approved before you will receive your ID number.
Before mailing in your application, make sure that you've included the correct information on Form SS-4. As with fax applications, the IRS will examine the information you have provided to make sure you actually need an EIN. If you live somewhere other than the US and wish to obtain an EIN for your company, you can call 267-941-1099 to acquire your tax ID. This number is available from 6 a.m. to 11 p.m. from Monday to Friday.
When making this phone call, you should be sure that you have authorization to provide the information required on Form SS-4 and that you have authorization to receive an EIN.
Register with Your State
After you have completed IRS business registration, you need to register your business with the tax authorities in your state. Your business will likely need to fulfill tax obligations at both the local and state levels, even if your business operates only online. Every new business needs to register with their state revenue office. Before you can collect sales tax, you may need to apply for a permit.
Getting Business Permits
Before you start offering goods or services to customers, you should be certain that you've obtained the correct permits and licenses for your business. Even e-commerce business, or business that you operate out of your home, must be licensed in certain jurisdictions.
Depending on the location of your business, you may need to contact several government agencies and complete a large volume of paperwork. If you can cover the expense, you may want to hire an attorney to help you with this paperwork. With professional help, you'll be able to quickly fill out your applications and receive your permits sooner.
To find out what different permits and licenses you need, you should call the office of your county clerk or the permitting office in your city. You can also visit the Small Business Administration (SBA) website, where you can find a tool that will help you search for permits and licenses.
If you need help with IRS business registration, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.