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What is a Business ID Number?

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Christian Brim
What is a Business ID Number

What's in a name?  Well Business ID Number means different things to different people.  Let's discuss the possibilities.

When most people talk about their Business ID Number they are actually referring to their Employer Identification Number (EIN) issued by the IRS.  The IRS assigns these EIN's to every business entity even sole proprietors, although sole proprietors (schedule C) don't have to have an EIN unless they remit payroll taxes.  They can use their social security number on their tax returns.

How do I Obtain an Employee Identification Number?

You can obtain an EIN online with the IRS tool.  The questions are tricky, however, so if you are not sure, ask us!  Completing the form online with incorrect or erroneous information can cause headaches with the IRS.  Usually it is nothing fatal, but it is a waste of time fixing it.

If you are old school, and want to wait a long time, you can complete IRS form SS-4 and mail or fax (if you can find one).

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What do I do with the Employee Identification Number?

If you are forming an LLC or corporation for your business, make sure that you provide your EIN to the bank, and change the name on your bank account.

You will need your EIN when filing any federal  (and most state income) tax returns, including 941's, 940, 1099, and W-2's/W-3.

Other Business ID Numbers

States and municipalities will issue additional numbers to a business to remit various taxes and fees.  For instance, you will be issued a separate sales tax permit number for reporting and remitting sales tax.  Another example is state unemployment agencies using a different number than EIN to report wages.

One often confused number is those issued by Dun & Bradstreet.  They are a commercial credit rating agency that acts similar to your personal credit report when issuing credit to businesses.  A D&B number is not used for any tax reporting.

 

If you need help in determining whether you need an EIN, how to obtain, or what to do with it, please shoot Core Group an email.  We are happy to help!


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