If I Need a TIN, How Will I Know?

In the United States, some companies must obtain a federal tax ID number before they can legally do business. As you go through the process of starting your own company, it is important to understand whether you need a TIN.

What Is the Definition of a Tax ID Number?

If you’re asking yourself “what is a TIN,” don’t worry. Many people do. A tax identification number identifies your company so that you can perform important business tasks, such as opening bank accounts or unsecured lines of credit in your company’s name or hiring employees. If you are a sole proprietor, a tax identification number allows you to keep your personal social security number private, which adds a layer of protection from potential identity theft.

What is a Tax ID vs. an Employer ID?

If you’ve never heard of a TIN, perhaps you’ve heard of an EIN instead. New business owners often wonder what the difference is. When comes to TIN vs EIN, there is no difference. Tax identification numbers and employer identification numbers are just two names for the same thing. No matter what you call it, the nine-digit number you receive has the same purpose: identifying your company.

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Who Needs a TIN?

While not all companies require an ID number (sole proprietors usually do not), most people who fill out LLC forms choose to apply for one. Some business types are required to apply for an identification number by law. You must apply for a TIN if you:

  • Intend to hire employees
  • Own a corporation or partnership
  • File tax returns for alcohol, excise, firearms or tobacco
  • Withhold taxes on non-wage income for a non-resident alien
  • Have a Keogh plan
  • Own a non-profit organization
  • Are part of a farmers’ cooperative

Although not technically businesses, people who have certain types of trusts or IRAs, are responsible for an estate, are plan administrators or are conduits in real estate investments must obtain a TIN as well.

Now that you understand a bit more about employer identification, it is time to apply for TIN number. Let GovDocFiling help by filling out our easy and convenient form.

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