What is my state tax ID number for my business? Many business owners ask this question to determine how to obtain a tax ID number, as well as the tax status of their company.

What Are the Types of Businesses That Require an Employer Identification Number (EIN)?

The following businesses require an EIN:

  • Corporation
  • LLC
  • Sole proprietorship with employees that pay personal income tax
  • Partnership

How Can You Obtain an EIN?

To obtain an EIN, you need to file an application with the IRS in person, online or by phone. It's advisable to have a copy of Form SS-4 with you if you want to apply on the phone.

Where to Download Form SS-4

You can download Form SS-4 through the IRS website.

Where to Obtain an Illinois Business Tax Number

To obtain an Illinois business tax number, you have to apply to the Illinois Department of Revenue.

What Is a Tax ID Number?

Tax ID number often refers to the EIN issued by the IRS. However, it can also represent a state tax ID number.

How to Determine if You Need an EIN for an Online Business

If your online business is a sole proprietorship or limited liability corporation without any employees, all you need is a personal Social Security number. However, you need an EIN if your company has employees.

What Are the Types of Businesses or Organizations That Would Require an EIN?

The following businesses require an EIN:

  • Businesses that file tax returns for employment, excise, or alcohol, tobacco, and firearms
  • Organizations such as trusts, nonprofits, and estates

Where to Take an Online Quiz to Determine if an EIN Is Required

You can take an online quiz on the IRS website to determine if your business requires an EIN.

How to Determine if You Need a State Tax ID Number for an Online Business

If your business involves selling products and services online, you likely require a state tax ID number, also known as a reseller certificate or sales tax permit.

A person who sells goods online will likely have to charge customers sales taxes and also be required to pay taxes on inventory, and this requires a state tax ID number. On the other hand, a person who sells services online may not need a state tax ID number, unless they sell parts to clients and charge sales tax on the parts.

Advantages of Obtaining a State Tax ID Number

State tax ID numbers allow businesses to buy raw materials at discounted prices, making it more affordable for their customers and ultimately boosting sales.

The Difference Between a State Tax ID and an EIN

The following are the differences between a state tax ID number and an EIN:

Issuing Agency

Businesses obtain state tax ID numbers from the department of revenue of the state where it is located. The company requires another state tax ID number if it relocates to another state. On the other hand, the IRS is the agency that issues EINs to businesses, and the company retains the number for its active life. The IRS is a federal agency, so the EIN can be used anywhere in the country.

Purpose of EIN

An EIN is a form of business identification, similar to how a Social Security number serves as a personal form of identification. The primary purpose of an EIN is to identify a company's income tax and employment tax returns. EIN is nationally recognized and can be used to identify a company in any part of the country. Also, an EIN doesn't change, and it can't be issued to another company unless the legal status of the business changes. An EIN can be used to obtain loans, apply for business licenses, and open business bank accounts.

Purpose of a State Tax ID

A state tax ID is usually used for reporting state tax. It is not useful outside of the issuing state.

When Is a Company Required to Have Multiple State Tax IDs?

Companies that have workers in multiple states must have state tax ID numbers for every state where they have employees, as they need it to report and file state payroll returns with each state. This makes state tax ID numbers only useful in the state where it was issued.

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