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

Tax Identification Numbers

For personal returns, your Social Security number is your tax identification number. But for business you may have several different numbers.

Your tax identification number is a 9-digit number unique to you. You use this number when filing tax returns, making tax deposits, hiring employees, opening a business bank account, applying for a loan, and setting up a qualified retirement plan. Usually you use a federal employer identification number (EIN) obtained from the IRS as your tax identification number (even if you are not an employer because you do not have any employees).

If you are a sole proprietor (or the sole owner of a limited liability company), you can usually use your Social Security number as your tax identification number on your income tax return. But even this type of business must use an EIN for a business bank account, to report payroll taxes, and to start a Keogh, SEP, or SIMPLE plan. And, in this era of identity theft, you may want to use an EIN 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, so that you do not have to give your Social Security number to the contractor.

Where to Get Your EIN

You can obtain your federal EIN by completing IRS Form SS-4, Application for Employer Identification Number, online at www.irs.gov and search “EIN Online” (see Chapter 1).

When you apply online, the IRS automatically enrolls you in the Electronic ...