Do You Need a Federal Tax ID Number?

At some point your business will need one of these

It Asks for a Federal Tax ID. What the Heck is That?. Julie Thurston/Getty Images

The government form you're feverishly filling out has a blank demanding your business's "Federal Tax ID Number" or "Employer Identification Number (EIN)." Unfortunately, you don't have one. What is a federal tax ID number, does your business even need one, and how do you get it?

Q. What is a federal tax ID number?

A. A federal tax identification number (also known as an employer identification number or EIN), is a number assigned solely to your business by the IRS.

Your tax ID number is used to identify your business to several federal agencies responsible for the regulation of business.

Q. Does my business need a federal tax ID number?

A. Any business offering products or services that are taxed in any way must get a federal tax ID number. If your state taxes personal services, or if you are required to collect sales taxes on your sales, you need a federal tax ID number. All the government forms you will be required to file for your business will require either a Social Security number or a tax ID number.

It's safe to say that any business that has employees and/or pays any kind of taxes will need a federal tax ID.

Best advice is, when in doubt, get one. It's easy to do.
See: How to get a federal tax ID number

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