Why you need a Federal Tax ID Number

March 31, 2014

If you're just starting a business, there are several important steps you must take to make sure your business is in compliance with government requirements. One important step is to obtain your Employer Identification Number (EIN), which is also known as a Federal Tax ID Number. This is the nine-digit number that is assigned to your business for tax purposes. This number is used by the IRS to identify your business and you will also need to use it on official documents. 

If you meet the requirements outlined on the IRS website, you will need to obtain an Employer Identification Number. Any business being run as a corporation or a partnership is required have one, and if you are starting a new business you will most likely need to obtain a new Federal Tax ID Number.

You will need an EIN if you plan to have employees, and if you intend to open a bank account specifically for your business, this number will be required in order to do so. Technically, if you are operating your business as a sole proprietor, you may use your Social Security Number for this purpose, but it is recommended to obtain an Employer Identification Number anyway. 

An online incorporation services company can help you easily cover the steps that must be taken to get your business started and headed for success.  Working with incorporation professionals can give you the personal attention you need to ensure that incorporating your business goes smoothly. Although you can apply for your Employer Identification Number yourself directly through the IRS, an incorporation services company can make this process easier on you by handling your application for a nominal service fee.