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When do I need a tax id

When do I need a tax id

When do I need a tax id

When do I need a tax id (federal tax ID)

You need it when you start a business, a non profit, a trust or when hiring employees, or if you are a partnership, an LLC, or a Corporation ( C, S, o non profit ). All businesses are required to obtain at least one tax ID number. 

You need a federal Tax ID when you start a business and/or you are a corporation, an employer. Normally, that is a federal tax ID number you are required to obtain.

Other Tax IDs

A sales tax ID is required if you will need to pay sales tax and is some states you also need the federal tax id if you need a sales tax ID. You can also optionally obtain a federal ID if you need a sales tax ID for the sales tax.  You can use the federal tax ID as a business tax ID.

For example, seller's of any type of merchandise are required to collect and pay sales tax. That requires that you obtain a sales tax ID. 

Another tax ID is a state employer tax ID that you will need if you hire employees. 

Finally, there is a tax registration that is called a business license and all businesses need a business license.


If you are getting a free tax ID ( Federal Tax ID ) to collect charitable, athletic league, religious or other not for profit organization, here is how to do this correctly. 

You will need a federal ID and a formation of a non profit corporation. 

You can obtain both here at this site. 

You can also File a DBA business name registration and obtain the federal ID obtain both here at this site to open a bank account to deposit the contributions. 

However, all money that you don't spend or somehow you will not be able to expense and justify to the IRS , you will have to pay taxes on that amount. 

For example, you received $100,000 in contributions and you spent for charitable related purposes $50,000, you will have to pay taxes as personal income taxes for the $50,000. 

To avoid that and do everything legal, apply here for the free federal ID, and the Nonprofit formation of the corporation. 

As soon as you obtain these, apply for your organizations tax exempt status so you will not have to pay taxes on the contributions you receive.

There are 4 Tax IDs: 

  1. A federal tax id,  Federal EIN

  2. A state ID employer EIN,

  3. A state ID Sales Tax ID, and 

  4. A business tax registration Business Tax ID.
There are 4 Business Structures

  1. Sole Proprietor

  2. Partneship ( general or limited )

  3. Limited Liability Company

  4. Corporation ( C,S,or non profit).

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