A federal employer identification number is a 9-digit number given by the IRS to business firms for filing and reporting tax purposes. The IRS makes use of this number to give an identity to the tax payer. Also known as EIN, the federal tax id number is used by business firm, corporations, organization, partnerships, trusts, sole proprietors and limited liability companies. However, if you are a sole proprietor and you need an EIN, then here are some of the reasons why you should have them.
- Hire more employees
- File for bankruptcy
- Form a partnership company
- Inherit an existing work
- Have a retirement plan in the future
- Open a business account in a bank
A federal tax id for sole proprietorship may not be needed for every purpose, but even if it is not needed majorly, it helps in a number of other fields too. Some of them are mentioned below:
- Avoid identity theft
Taxpayer’s identity theft has become a common problem. Identity thieves steal the SSN (Social Security Numbers) of tax payers and use them to file scam tax returns and get tax refunds. Thus, it is important to keep your SSN number private. However, when you have your EIN number with you, then you will no longer have to provide your Social Security number to anyone and it can be kept private.
- Get independent contractor stature
With your EIN listed on your tax returns and payment receipts, you can show others that you are independent business person. It makes your company more appealing to prospective clientele.
How do you get tax id number Texas?
In order to get tax id number Texas, all you need to do is apply directly at the IRS website. You can seek help of the EIN assistant tool online. If you are not satisfied with sending your identity details on the internet just download the form and post it. However, the IRS is a reliable website and you can easily fill the form online. It just takes 5 minutes to fill the form and submit and get immediate confirmation.
- Just select your entity i.e. the purpose for which you need the federal tax ID number.
- Begin filling the application form.
- Answer 5 short questions by choosing the option that best describe why you need the sole proprietorship tax id number. Fill in your name and Social Security Number before completing the application.
- Once you fill the details, you will get an EIN immediately. Confirm the application and save a copy on your computer.
In case you lose your EIN, then make a call to the IRS Business and Specialty Tax Line and speak to the representative. After giving some identification info, you can get your EIN again. Remember, once you finalize your EIN, the number cannot be cancelled. But, if you do not need it in the business, then IRS will close your business account but the EIN will always remain available to you.