10 step complete guide for starting a consulting business from scratch.
Get Federal and State Tax IDs
Once you decide on your legal business structure, be sure to register with the government and obtain all required tax IDs, including an Employee Identification Number (EIN).
Here’s what you need to know about tax IDs for your new business.
The types of federal and state tax IDs you will need
You may need to get an employer identification number (EIN) from the IRS.
If you’re a sole owner and don’t have employees, this is not required. But you might want to get an EIN anyway to keep your personal and business taxes separate and to be sure that you can quickly hire when the time comes to expand your business.
The IRS has a useful checklist to help you decide whether you will need an EIN to run your business. If you do need an EIN, you can register online for free.
Do you need both federal and state tax IDs?
Typically, partnerships, corporations, LLCs and sole proprietorships with employees must get an EIN from the IRS and a state tax ID. Unless you operate your business as a sole proprietorship, you will, at a minimum need to get the EIN from the IRS.
Most states issue state tax IDs and you’ll get that when you register your new business with your state.
You do not need a separate tax ID for your DBA
Many sole proprietorships and general partnerships (as well as other business entities) still want to operate under a business name. To do so, they should file a DBA (Doing Business As) with their local state or county. Here are the DBA requirements in all 50 U.S. states and territories.
Since a DBA is not a separate legal business, you do not need to obtain tax IDs for a DBA as long as you have a tax ID for your legally registered business.
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