Blog

When Does a Business Need a Tax ID?

[social_warfare buttons=”Total”]An Employer Identification Number (EIN) or otherwise called a taxpayer ID or tax ID number, is a requirement for most businesses. This is the number that the IRS will use to identify your business and its tax obligations. Here’s what you should know if you are trying to determine whether or not you need a tax ID.

LLCs and Sole Proprietorships Need a Tax ID

If you operate an LLC or sole proprietorship that has no employees, you can usually use just your Social Security Number as your tax ID. However, if you are a sole proprietor and you file excise tax returns or pension returns, you do need an EIN. Further, if you have a partnership that has no employees who are not partners, you will need an EIN.

Instances that Call for a New EIN

There are also certain times you’ll need a tax ID due to a change in circumstances. Those times might include the following:

• If an individual owner dies leaving a business in an estate;
• The business changes from being a corporation to being a sole proprietorship or partnership;
• The business changes from being a partnership to being a sole proprietorship or a corporation;
• The business changes from being a sole proprietorship to being a partnership or a corporation; or
• A person buys or inherits an existing business and plans to run it as a sole proprietorship.

Obtaining an EIN

Fortunately, if you have determined that you need an EIN, getting one is usually a fairly simple process. You can apply for an EIN through the mail, by fax, by telephone, or online, depending on your preference.

• If by mail: If you complete Form SS-4 and send it into the appropriate address for the IRS, the IRS will mail your EIN back to you.
• If by fax: Send a completed Form SS-4 to the IRS fax number and the IRS will fax your EIN back to you within a time frame of four business days.
• If by telephone: You can call the Business & Specialty Tax Line (1-800-829-4933) during business hours Monday through Friday.
• If online: You can apply for your EIN from the comfort of your home. Simply visit the website and fill in your business’s information. Often, you can get your EIN right away. Note that this service is available for all businesses whose legal residence or principal office is located in the US.

If you operate an LLC without any employees or a sole proprietorship, you will not need an EIN for your business. All other businesses typically need to have a tax ID. The best way for you to learn about this and many other tax laws applicable to your business is to consult with an experienced tax law attorney.

If you need a tax ID, or have questions about whether you need a new tax ID, a NYC tax attorney at Mackay, Caswell & Callahan, P.C. have the experience you need to help you with any tax issues. For a consultation, fill out our online contact form or call 844-MCC-4TAX (622-4829). We have offices in Albany, New York City, Rochester, Syracuse, Utica and Watertown, so whether it’s a NYC tax attorney or a Syracuse tax attorney you need, we stand ready to help you.