J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Tax Identification Number

For individuals on personal returns, the federal tax identification number is the taxpayer’s Social Security number. For businesses, the federal tax identification number is the employer identification number (EIN). The EIN is a 9-digit number assigned to each business. Usually, the federal EIN is used for state income tax purposes. Depending on the state, there may be a separate state tax identification number.

If you are just starting your business and do not have an EIN, you can obtain one instantaneously online using an interview-style application at www.irs.gov (search “EIN online”) or by filing Form SS-4, Application for Employer Identification Number, with the IRS service center in the area in which your business is located. Application by mail takes several weeks. An SS-4 can be obtained from the IRS web site at www.irs.gov or by calling a special business phone number (1-800-829-4933) or the special Tele-TIN phone number. The number for your service center is listed in the instructions to Form SS-4. If you call for a number, it is assigned immediately, after which you must send or fax a signed SS-4 within 24 hours.

If you change your business entity (e.g., from a sole proprietorship to an S corporation), you usually need to obtain a new EIN. You can determine whether you need a new EIN at www.irs.gov (search “do you need a new EIN?”).

SPECIAL RULES FOR SOLE PROPRIETORS

Because sole proprietors report their business income and expenses on their ...