A tax identification number is essential if you’re dealing with banks or the government. Individuals usually use their Social Security Number (SSN) or Individual Tax Identification Number (ITIN) in these situations, but businesses, nonprofit organizations, estates, trusts, and multiple other entities need their own special tax ID number. Wondering how to apply for a tax ID number online or by phone, mail, or fax? The process is simpler than you think. Keep reading for tips and ideas.
Steps to Completing an IRS Tax ID Application
- Prepare Business Owner Information
- Apply for a Tax ID Number Online
- Apply for a Tax ID Number by Phone, Mail or Fax
- Why Do I Need to Obtain an IRS Tax ID Number?
- How Do I Get a Tax ID Number?
To issue you a tax ID number, the government needs to know some information about your business or organization. Before you start the application process, you should prepare business owner information. The Internal Revenue Service (IRS) requires the principal officer or owner of the business to sign the application. This individual acts as the main point of contact between the government and the business.
Beyond their signature, you also need a variety of details about the business including its address and phone number, the number of employees, whether or not you anticipate paying more than $1,000 in payroll taxes, type of business structure, and where the business was incorporated if applicable.
If you’re applying for a tax ID for a trust, the trustor acts as the responsible party for the organization. For an estate, this person is usually the estate administrator. However, this individual doesn’t necessarily have to fill out the whole application. They can also sign the application to indicate that a third-party designee has filled out the details.
Once you have taken some time to prepare business owner information, you can start to apply for a tax ID number online. Applying online is the fastest and most convenient option for most people. You don’t have to print out forms, you don’t have to fill out anything by hand, you don’t have to mail anything, and in a lot of cases, you don’t even have to leave the comfort of your home or office. Far shorter than calling or waiting in line, the online Tax ID application is the preferred way to obtain your tax ID number in under an hour.
Alternatively, you may also be able to apply for a tax ID number by phone, mail or fax. If your business was established or if it is headquartered in another country, you almost always have to apply over the phone. Note that the government offices that issue tax ID numbers are only open during certain hours so you need to be sure to call during the right hours. If your time zone prevents you from doing that, you may be able to appoint a representative to deal with the government on your behalf.
U.S.-based applicants can apply over fax or through the mail. With both of these processes, you have to fill out a paper application. To ensure the application is processed as quickly as possible, you should make sure that you provide all the requested information. If you apply over fax, put your return fax number on the application. Then, you should receive your tax ID number within about four business days. Through the mail, the process usually takes four weeks. However, these are estimates.
A lot of business owners or people handling trusts and estates want to know, “Why do I need to obtain an IRS tax ID number?” In a nutshell, you need a tax ID so that you can communicate clearly with the government. In particular, you need a tax ID to put on corporate income tax returns, nonprofit informational returns, sales tax returns, payroll tax payment slips, and similar forms. Businesses often have a lot of overlap in their names so using your entity’s name is not that clear. When you have a special tax ID number, the government knows exactly who you are.
Usually, when you obtain a tax ID number from the government, the number is called an employer identification number (EIN), and sometimes, it’s referred to as a federal tax identification number (FEIN). You need this number before you can hire your first employee. You have to put this number on the employee tax forms, and you need it when you remit payroll taxes to the government.
Estates and trusts also need a tax ID number. Although it’s still called an EIN, these entities need the number whether they are an employer or not. Additionally, most entities use tax IDs when they deal with banks. In particular, if your business or organization needs to open a bank account or apply for a loan, you also need an EIN or a similar tax ID number.
In addition to federal tax ID numbers, there are also state tax ID numbers. Typically, these numbers are just referred to as tax ID numbers, but some states may use different labels. Your business may need a state tax ID number to file state sales or business income tax forms. Additionally, you use your state ID when you remit state income tax on behalf of your employees.
To recap the process, here’s a step-by-step look at the answer to the question: How do I get a tax ID number?
- Prepare business owner information or details related to your trust, estate, or other entity.
- Determine if your business is based in the United State or another country.
- If based in another country, prepare to apply for the tax ID over the phone.
- If based in the United States, decide if you want to apply through the mail, online, or over fax.
- Complete the application.
- Wait for your tax ID number to get issued.
- Use your tax ID number on government forms, bank loan applications, and other documents.
A tax ID can be essential for critical business processes, and without this number, you can’t go to the next level. Luckily, you can apply through a variety of venues, but applying online is the fastest and easiest option.