Michigan Tax ID Number: Everything You Need to Know
A Michigan tax ID number is similar to an EIN, which is issued by the IRS. Despite its name, an EIN has little to do with a company's business.7 min read
2. Michigan Federal Tax ID Number
3. Uses of Employer Identification Number (EIN)
4. Uses of Michigan Federal Tax ID
5. Ways to Obtain an Employer Identification Number (EIN)
6. Employer Identification Number (EIN) Online Application
7. Obtaining a Federal Tax ID Number
8. Using a Third-Party Intermediary
9. Obtaining a Michigan Tax ID Number for a Trust or Estate
Updated October 22, 2020:
A Michigan tax ID number is similar to an Employer Identification Number (EIN), which is issued by the IRS. Despite its name, an EIN has little to do with a company's business.
Employer Identification Number (EIN)
An EIN is a nine-digit number that identifies a business to the government, functioning in much the same way as a social security number functions for an individual. In an EIN, the first two numbers and the last seven are separated by a hyphen, which helps to distinguish an EIN from a social security number. You can apply for an EIN with the IRS free of charge.
Michigan Federal Tax ID Number
Banks, government entities, and companies can use your Michigan tax ID number to identify your business. A Michigan tax ID number is a requirement for all businesses in the state of Michigan. Before you can request a Michigan tax ID number for your business, you will need to acquire an EIN from the IRS.
Uses of Employer Identification Number (EIN)
There are a variety of uses for an EIN, including:
- Opening checking, investment, and savings accounts for your business
- Filing business taxes
- Fulfilling employee payroll obligations
- Acquiring a credit line for your business
- Obtaining credit cards for your LLC
- Business license applications
Uses of Michigan Federal Tax ID
One of the main purposes of a Michigan tax ID number is protecting the identity of your business by linking your important business information to this single number.
A Michigan tax ID number can make your business feel more professional. Instead of providing an employer with a Social Security number, an individual can provide their Michigan tax ID number, indicating their professionalism and their ability to fulfill work requirements. Anyone interested in receiving the benefits of a tax ID number should seek advice from professionals, which can make the application process much easier.
Ways to Obtain an Employer Identification Number (EIN)
Acquiring an EIN can be accomplished by mail, fax, or through the online application provided by the IRS.
Applying for an EIN by fax can take up to four days, and applying by mail can take as long as four weeks, so it's best to use the online application option. Applying online is the fastest way to obtain an EIN. As soon as you've finished filling out and submitting the online application, you will be issued your EIN.
Upon issuance, you can download your EIN so that it can be saved or printed. You will also be able to download your confirmation letter.
Before you apply online for your business's EIN, you will need the Social Security numbers or ITINs of every business member. U.S. citizens applying for an EIN will use their Social Security number. A foreign national requesting an EIN will need their Individual Taxpayer Identification Number. Foreign nationals that do not have an ITIN will need to apply for this number before requesting their EIN. The IRS can provide assistance for foreign nationals seeking an ITIN.
Employer Identification Number (EIN) Online Application
To apply for an EIN online, you first need to visit the IRS website. Once you're on the site, locate and click the “Apply Online Now” link. Click “Begin Application,” choose “Limited Liability Company,” and then click “Continue.” After clicking “Continue” again, you should enter how many members there are in your LLC. Then, you will choose the state where your LLC will be formed.
Choose “Started a New Business,” which should be the first option, and click “Continue.” Now, you will need to choose “Individual” and click “Continue.” At this point, you will need to enter important information such as your Social Security number and name. With this information entered, select the option for LLC owners (called members), and click “Continue.”
On the following page, you will need to provide the principal address of your LLC, which will also usually be the physical location of your company. When you provide the address of your company and click “Continue,” the address will be verified by the IRS. You should click “Accept Database Version” to proceed.
Next, you will provide the name of your LLC, as well as the state and county where it is organized. For example, if you want to name your business “Rhonda's Bakery, LLC,” you would enter that “Rhonda's Bakery LLC” and the start date of the company. This start date must match what you used on the LLC operating agreement and application to form your LLC in the state of Michigan.
When entering the name of your LLC, it's important to remember to include the abbreviation LLC and to avoid using commas. Click “Continue,” and then answer the questions on the next page. Read through all of the questions to make sure you're answering them correctly, such as whether the LLC manufactures, offers, or sells certain products or services, such as tobacco, alcohol, gambling, etc. Most of your answers should be “No.”
After you hit next, you will need to input information about what your business does. It should match what you included in the operating agreement. If the business will provide consulting services, scroll to the bottom of the screen and select “other,” unless another category applies. When you have selected the appropriate business category, click continue. In the consulting example, since you selected other, you will need to select a sub-category, such as:
You will also need to answer the question about whether your business provides operating assistance and/or advice to other organizations or businesses. The next page will ask how you would like to receive your EIN confirmation letter. The options are to receive it by mail or online. Most applicants elect to receive it online since the mail option will take up to four weeks. If you select this option, you will be able to print and save the letter in PDF format.
The next page will include all information you input on the form. Review it carefully to make sure everything is accurate. Finally, you can hit submit, and you will see a confirmation page. This page will include the assigned EIN and the business name. Save or print a copy of this page before continuing. After you hit continue twice more, the application for an EIN will be complete.
Obtaining a Federal Tax ID Number
After you acquire the state EIN for your business, you may need to obtain a federal tax ID number. This process is fairly simple, and you will receive the federal tax ID number right away. Visit the IRS website to get started. You can also apply for a federal tax ID number by phone when you call (800) 829-4933. Business hours for the phone application system are 7 a.m. until 10 p.m. CST on Monday through Friday.
You can also find form SS-4 on the IRS website. Fill out the form and fax it to receive a federal tax ID number within four business days. If you file the form by mail, the process of receiving a tax ID number can take up to four weeks. You don't have to pay a fee to get this number for your business.
Using a Third-Party Intermediary
Some businesses elect to use a third-party company to collect information about the company, such as the federal tax ID number (if applicable), the number of employees, and the business name. In order to acquire a Michigan tax ID number through a third-party company, you would need to pay any required fee, which is typically between $20 and $30. It's easier to use a third party to handle the process of getting a tax ID number, especially when you select a company with a lot of experience.
Dealing directly with the IRS can be confusing, especially if you haven't gone through the process of obtaining an EIN before. The IRS is known for its complexity, so using a third-party company can simplify the process. Relying on an external company offers the most hands-off approach to getting the number needed to operate in the state. These intermediary companies handle the process and will get your EIN quickly and efficiently. You don't have to follow complicated instructions. Instead, everything is streamlined to avoid the headache.
Obtaining a Michigan Tax ID Number for a Trust or Estate
If someone is serving as the trustee or executor of a dead person's trust or estate, that individual will need to obtain a tax identification number for the trust or estate. In most cases, the executor can't use the Social Security number of the person who has passed away, nor can they use their own tax identification number.
The only exception is if the executor is the surviving spouse of the person who has passed away and the deceased individual has left everything to the spouse in a revocable living trust. If this is the case, the spouse can use their own Social Security number since the items become their assets. In this case, the EIN serves as a Social Security number for the estate or trust.
A trustee or executor needs an EIN to open a brokerage or bank account for the assets. The financial institution or bank used for the account will use that number to report any interest earned on the accounts until the funds have been distributed to the beneficiaries of the trust or estate.
The fastest and simplest way to apply for an EIN as an executor is through the IRS website. Simply fill out the form, which will take a few minutes, and you will receive the EIN needed for the estate or trust. The online form includes a virtual assistant, which will ask questions as you go through the pages to prevent confusion. You can also print out and complete a copy of the SS-4 application form before you get started to make sure you have all the information needed.
Although the order of the form on paper and online differ slightly, you will still have the information you need to fill out the online form if you complete the paper form first. If you don't have access to the IRS website, you can also fax the application to the IRS fax number: (859) 669-5760.
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