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Acquiring federal Tax ID number

finances19159348.jpgPart of starting up your business to be a legal and legitimate company requires you to fill out proper paperwork and many other things. One of the things you are required to do is to acquire a federal tax ID number. This number is used by the IRS to identify your business and to make sure you are properly regulated. They are commonly seen on official documents for the business like your w-2 statements and other tax filing forms.

How do I know if you need a tax ID number? Do you sell anything? If you have a good or a service that you provide and you get compensation, you need to have a federal tax ID number. You must collect taxes on the items you sell and pay your portion to the federal government along with your state. Some businesses can get by with their social security number but this is usually only if you are a sole proprietor. All other business structures need to acquire a federal tax ID number.

If you aren't sure if you need a Federal tax ID number, you should acquire one because it doesn't take very long to do and it's a simple way to protect yourself and your business from any problems that can arise by not getting one.

How do you acquire a federal tax ID number? Find your nearest IRS office to acquire one or you can head to their website to download the paperwork and file for one. It takes about 5 minutes or less to file the paperwork and acquire a federal tax ID number.

Have you acquired your employer identification number? You can also apply for an EIN off the IRS website and it will take just a few minutes to do. Unlike the Tax ID number, you will acquire the EIN number immediately after you fill out the online form and pay the fees.

Upon filing for a federal tax ID number and getting your EIN you should then start filling out loan documents and other forms. Talk to the Small Business Administration to ask about the different loan options that are available so you can apply for them. It will broaden your ability to acquire the funding you need to get your small business started so you aren't struck trying to find a loan when lenders just aren't willing to offer them. The loans offered through the SBA also come with some perks as they actually are backed by the government, so they are seen as a lower risk to the lenders and this can broaden the number of lenders you can work with.

You also need to ask the IRS with tax filing help. Since every small business is different, there are several different rules and regulations you need to adhere to in order to file your taxes correctly. Failure to understand these rules and failure to properly file your taxes means you can end up paying hefty violations. Here are some of the things you need to know about proper tax filing procedures for the different businesses:

  • Sole proprietors are taxed at a 15.3% tax rate and they must pay the entire tax. The taxes need to be paid quarterly and you must pay the full amount owed or you will pay a fee. The requirement is to pay at least $1,000 per year in taxes, even if you will get some money back as a tax refund.

  • S-corporations and most other small businesses must pay the payroll tax in addition to other taxes like Social Security and Medicare. You will need to make sure you are doing your calculations correctly or you will face strict penalties.

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