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What's Your Business Number?
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What's Your Business Number?
Consumers have it easy—they use their Social Security number to file their taxes, open up a bank account, and obtain a credit card. When it comes to businesses, however, things can get complicated; you usually have to use a different number for various purposes.
Here are the numbers you may need to obtain for your business.
Employer Identification Number
An employer identification number (EIN) is a nine-digit number used as a business’ federal tax ID number on all federal tax returns. Businesses, such as partnerships and corporations, must use an EIN. Sole proprietors and one-member limited liability companies (LLCs) can use their Social Security number as their tax ID, but even they need an EIN if they:
- Have any employees (withholding and FICA taxes are reported under your EIN).
- Pay any excise taxes (for example, farmers may do so on fuels).
- Have a Keogh, SEP, or SIMPLE retirement plan.
A bank may require a sole proprietor or one-member LLC to have an EIN to open up a bank account or obtain business credit card. But even if an EIN isn’t required, if you may opt to use one so you don’t have to give out your Social Security number and risk identity theft if you:
- Pay an independent contractor $600 or more for the year and are required to report this income to the IRS and the contractor on Form 1099-MISC (the contractor sees your number).
- Provide services to businesses that request you complete Form W-9 (the businesses see your number).
How to get an EIN. You can apply for an EIN online using the IRS’s online interview format. It takes only a few minutes, you receive the number instantly, you can do it yourself (no attorney or accountant is required), and there’s no cost. You can also do it by mail; complete Form SS-4 and send it to the IRS service center listed in the instructions to the form.
Unemployment insurance number
If you have any employees in your business, you’ll have to pay state unemployment insurance. While called insurance, this is really a tax based on your payroll and, usually, on your claims experience (the more that former employees apply for unemployment benefits, the higher your “rating” and, consequently, your taxes). While you may be able to use your federal EIN to pay state income taxes, you’ll probably need a special state-issued number for unemployment insurance purposes.
How to get your state unemployment insurance number. Contact your state labor department. In Georgia, New York, and South Carolina, you can obtain both the federal and state numbers with one click.
Sales tax number
If you sell goods and services subject to sales tax in your state, you’ll need to obtain a unique number for sales tax purposes. This is called a sales tax number, resale number, seller’s permit, sales tax license, or sales tax certificate. It is the number you use to remit to your state the sales tax you’ve collected. It is also the number you use to be exempt from paying sales tax on the goods you purchase to resale (your inventory).
How to get your resale number. Contact your state finance, revenue, or tax department (find yours through the *Federation of Tax Administrators). If you’re in Alaska, Delaware, Montana, New Hampshire and Oregon—states without any sales tax—you don’t need a resale number.
Dun and Bradstreet (D&B), a business credit rating company, issues its own nine-digit number, called a D-U-N-S® number, to make it easy for it to track over 100 million businesses worldwide. You must obtain a D-U-N-S number if you apply for a federal contract, grant, or an interest-free America’s Recovery Capital (ARC) loan from the Small Business Administration. You need a separate number for each physical location of your business.
You can also obtain a number if you want to build a credit history for your business and enable customers, suppliers, and lenders to learn about your company easily. While getting the number by itself won’t establish a D&B credit file, it’s a first step.
How to get a D-U-N-S number. You can apply online at *DNB. There is no cost for obtaining the number and, if you apply online, you’ll usually receive the number within a day.
When starting a business, changing its form of ownership, or relocating to a new state, learn about the business ID numbers you may need. Again, check with the IRS and with your state business or economic development office for details.
*Not a government website.
Barbara Weltman is a respected corporate speaker, contributing editor, author of more than a dozen books from major publishers, sought-after expert media source, newsletter publisher and a trusted advocate for small business owners.
About the Author:
Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.