Get federal and state tax ID numbers

Get a federal tax ID number

Your Employer Identification Number (EIN) is your federal tax ID. You need it to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.

It's free to apply for an EIN, and you should do it right after you register your business.

Your business needs a federal tax ID number if it does any of the following:

Pays employees
Operates as a corporation of partnership
Files tax returns for employment, excise, or alcohol, tobacco, and firearms
Withholds taxes on income, other than wages, paid to a non-resident alien
Uses a Keogh Plan (a tax-deferred pension plan)
Works with certain types of organizations

Apply for an EIN with the IRS assistance tool. It will guide you through questions and ask for your name, social security number, address, and your "doing business as" (DBA) name. Your nine-digit federal tax ID becomes available immediately upon verification.

Change or replace your EIN

If you already have an EIN, you might have to change or replace it with a new one if certain changes have occurred with your business.

Types of business changes that might require you to change or replace your EIN are:

Name change
Address change
Changes in ownership
Changes in management
Change in tax status

Your requirements will depend on your business structure and the kind of change that occurred. Check with the IRS to determine exactly whether you need to change or replace your EIN.

Get a state tax ID number

The need for a state tax ID number ties directly to whether your business must pay state taxes. Sometimes, you can use state tax ID numbers for other functions, like protection against identity theft for sole proprietors.

Tax obligations differ at the state and local levels, so you'll need to check with your state's websites.

To know whether you need a state tax ID, research and understand your state's laws regarding income taxes and employment taxes, the two most common forms of state taxes for small businesses.

The process to get a state tax ID number is similar to getting a federal tax ID number, but it will vary by state. You'll have to check with your state government for specific steps.

State income and employment taxes for businesses

Seven states have no income tax, and another two only impose tax on income from dividends. States that do tax income will determine figures based on business structure.

Taxes also vary by state on employment insurance and workers’ compensation insurance. Understand these and other implications in calculating startup costs and choosing a business structure.

Visit your state's website to identify whether you need to get a state tax ID number in order to pay state taxes.

Form 1040 (U.S. Individual Income Tax Return), Schedule C, E, or F

Use Form 1040 (U.S. Individual Income Tax Return) to file your annual individual income tax return.

Use Schedule C (Profit or Loss from Business) to report income or loss from a business you operated or a profession you practiced as a sole proprietor.

Use Schedule E (Supplemental Income and Loss) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Use Schedule F (Profit or Loss from Farming) to report farm income and expenses.

To view these forms, click the following links:

For Form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf

For Form 1040 instructions: http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

For Schedule C: http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

For Schedule C instructions: http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

For Schedule E: http://www.irs.gov/pub/irs-pdf/f1040se.pdf

For Schedule E instructions: http://www.irs.gov/pub/irs-pdf/i1040se.pdf

For Schedule F: http://www.irs.gov/pub/irs-pdf/f1040sf.pdf

For Schedule F instructions: http://www.irs.gov/pub/irs-pdf/i1040sf.pdf

However, please do not complete this form now, as your session will time out.

Open a business bank account