If you’re getting ready to start a sole proprietorship, limited liability company (LLC), corporation, partnership, or even a nonprofit organization in Texas, you’ll probably need to have a tax ID in place before you start generating revenue. If you’re a new entrepreneur or if you’ve never started a business from scratch, the process may be confusing. This guide will teach you all the basics about tax ID numbers, including how to obtain one as quickly and efficiently as possible in Texas. Whether you run a restaurant business, retail store, automotive shop, or any other type of small business, read on to learn everything you need to know about Tax ID obtainment.
Steps to Obtaining a Tax ID (EIN) Number in Texas
- Prepare the Required Information
- Online Texas Tax ID Applications
- Traditional Texas Tax ID Applications: Phone, Mail or Fax
- What’s the Best Method to Get a Tax ID Number in Texas?
- Do All Business in Texas Need a Tax ID?
- Texas State Tax ID Number: What It Is and How to Get One
Your first task will be preparing the required information for the tax ID number application. There are a few different methods for applying for a tax ID number, but they share some commonalities. For starters, you’ll need to provide some basic information on your business’s founding members.
Before you can get a tax ID number, you’ll need to provide the full legal names and legal addresses of your partners (and yourself). You’ll also need to provide their
social security numbers (SSNs). If you gather these bits of information proactively, you’ll complete the application faster, oftentimes in the span of mere minutes.
If you’re going to get a tax ID number, you’ll need to fill out an application. How you access the application will determine how quickly you’re able to get your tax ID number, and how much effort you’ll need to expend during the process.
For all entrepreneurs, the best all-around method is to apply online. Because the application is available online, you can access it 24/7, using any device with an internet connection. This makes it much more convenient than any other application method. If you’ve gathered all the important information on you and your business partners, you should be able to complete this intuitive form in a matter of 5 minutes.
Once you’re done with the application, you can formally submit it, and this is where you’ll see why the online application is so preferable. After submitting, you should receive your tax ID number in an hour via email, making this by far the fastest application method.
Before the internet was commonly accessible, there were traditional application methods for getting a tax ID number. While these methods are still available today, they’re inferior to the online application in virtually every way. Still, if you’re interested in using them, you can fill out a paper application and mail or fax it in. You can also use the phone to connect with a live representative and engage in an interview. Either way, you’ll be answering the same questions; it’s just going to take longer. When you submit an application with these methods, you’ll have to wait 4 to 6 weeks to receive your tax ID number by mail.
Most Texas businesses will need to get a tax ID number. No matter what, you’ll have to go through an application process. This process is designed to collect important information on you and your co-founders, registering you with the government. However, there are multiple different application methods available to business owners. If you’re interested in getting your tax ID number as quickly and as pain-free as possible, there’s only one real option: applying online.
When you apply online, you’ll have the flexibility to complete the application anywhere, at any time, so long as you have an internet-connected device. Most people can finish this step in just 5 minutes. When you’re done, you’ll get your tax ID number over email in just an hour, compared to the 4 to 6 weeks it takes using alternative, more traditional methods.
These traditional methods include applying over the phone, which requires speaking to a live representative, or applying with a paper application, which you can submit via traditional mail or fax.
You might wonder if your organization truly needs a tax ID number. Tax ID numbers are used for a number of purposes, and are distributed upon registry with the government. The common term "tax ID" usually refers to a federal tax ID number, which is also called an employer identification number (EIN), though state tax ID numbers also exist.
You’ll definitely need a federal tax ID number for any business with multiple members, like a partnership, multi-member LLC, or corporation. You’ll also need one before you can hire employees. EINs are also commonly used for paperwork and financial purposes; you’ll need one to apply for a business bank account, a loan, or a business line of credit. You’ll also need one if you’re going to apply for any business licenses and permits.
Even if you aren’t officially required to have a tax ID number, it’s beneficial to have one, so you can use it in place of a personal SSN on various types of paperwork.
In addition to a federal tax ID number, your business may require a Texas state tax ID number. State tax ID numbers are assigned by state governments, whereas federal tax ID numbers are assigned by the federal government; while similar in nature, they serve very different purposes.
You’ll need a Texas state ID number if you’re hiring employees in the state of Texas, or if you’re going to sell taxable goods and services in the state. You may also need one if you’ll owe excise taxes on certain regulated goods. Most Texas businesses need both a federal-level and state-level tax ID number.
To get one, you’ll need to have a federal tax ID number in place, which you can get in an hour by applying online. When you have it, you can apply for a Texas state tax ID using a similarly efficient method (another online application). You should receive it in just 4 to 6 weeks.