Jumping Off Point

I l @ ve RuBoard

As we described in Chapter 7, all business owners must have a taxpayer identification number. The reason for this number is so that the IRS can identify you and process your tax returns. To review, there are two types of identification numbers : first, a Social Security Number (SSN) and second, an Employer Identification Number (EIN). SSNs are issued by the Social Security Administration and appear in a nine-digit form that looks like 000-00-0000. An EIN is issued by the IRS and also appears in a nine-digit format but looks like 00-0000000. All estimated tax payments for income tax of a sole proprietor must be recorded under the SSN.

When do you need an EIN:

• Whenever you have employees , even if you are registered as a sole proprietor

• If you operate as a corporation or partnership

• If you have a qualified retirement plan

• If you file returns for employment taxes; sales taxes; excise taxes; or tobacco , alcohol, or firearms taxes

How to get an EIN:

Complete Tax Form SS-4 ( Application for Employer Identification Number ). You may do this several ways:

• Fastest method: Fax ”call (800) TAX-FORM

• Internet: www.irs.ustreas.gov

• Slowest method: Filing by mail will take from 4 to 5 weeks

  When to apply for an EIN:

• You should apply for the number before filing your first business tax return or make a tax deposit. If you haven't received your EIN by filing time, send in your tax return anyway. Clearly write "Applied for" along with your application date in the EIN box on your tax form.

I l @ ve RuBoard