Tax id

[moniek]

Do you have to make a certain amount of money to have a tax id#? Or make a certain amount of money to consider it a "business"?

[SpaceGirl]

No.

If you sell, you're a business. You can have a tax ID and never sell anything.

Some rules and regs vary based on where you live, if you are in the US, check with your state.

I will say that some people who do an extremely low volume don't ever file as a business -- it's their choice, and in my mind a bad one. The paperwork to create a business in generally pretty low. I know in my state it's less than a nice dinner out. What gets expensive is insurance.

[debscent]

When I formed my LLC before I sold any product at all, I had a TIN or EIN. It's easy to obtain, you can file it online with the irs.gov site. (I do it daily for my clients in my day job).

[VerticallyEnhanced]

http://www.etax.dor.ga.gov/BusTax_SalesTax.aspx

[chrisasst]

well I am confused now. I have done some reaearch and found many places that says "A sole proprietor who does not have any employees and who does not file any excise or pension plan tax returns is the only business person who does not need an employer identification number. In this instance, the sole proprietor uses his or her social security number as the taxpayer identification number."

how true is this?

What does a tax Id actually do for you?

[Cissy]

If you are not writing any paychecks to yourself or to employees, you will not need to apply for a Federal Tax ID#. The reason you would need a Fed Tax ID# is for reporting payroll taxes deducted from your paychecks. If not writing paychecks, you will use your SSN# when you file your yearly business taxes. You will then pay your own federal, state, and self-employment taxes (15.3% of your net profit for SE taxes) with your return. The self-employment tax covers your FICA (social security and medicare taxes). Usually when you work for someone else, you pay 7.65% FICA deducted from your paycheck and your employer matches this. Since you are self-employed, you will have to pay double the 7.65%). If you are a small business, you will only do this yearly by April 15th. If you sell a lot, you might need to file estimated taxes during the year. Your accountant should let you know if you reach this point in sales. To start selling, you will need a state sales tax #, a business license (whether home-based or store front) you obtain through your county. If you are selling at markets, many states require another separate license to sell at that location. For home-based businesses, you need to check with your local zoning office to make sure you can have your business at your home.

I wouldn't take a chance selling, even at flea markets or festivals that don't require you show them a license when you rent a spot. Some states send their Sales Tax Reps around periodically to check and demand you show them your sales tax license or start packing.

[wickchick]

Just a thought, you CAN file for an EIN even if you're a sole proprietor. Wholesale companies will want an EIN prior to selling to you and you may not want to be giving out your social security number (if you're using that as a Tax ID). Just my $.02.

[MissMary]

Last two posts are right on!

[momtohaley2004]

Not sure about other states, but in TX, they no longer use the SS number for your tax ID. When I first got mine years ago for my other business they had a 2 in front of the SS number and a 1 behind it but the middle numbers were your SS number. I received notice about 2 and a half to three years ago or so that for privacy reasons they were changing this so that the tax ID number is by no means tied to your SS number and thus not tied to your personal identity in hopes this would avoid identity theft. Personally I like the new number better. Sure my old number was easier for me to remember BUT I always risked someone using it for reasons outside of business. Contact your state comptroller's office as they are the ones who will give you the best and most correct advise. You can look them up on the web and either check out a website or give them a call.

[islandgirl]

Not sure about other states, but in TX, they no longer use the SS number for your tax ID.

All states should implement this..

Using your SS # for any for business transaction is a bad idea..

To much ID theft..

Think about this, if you do not get a Tax ID# and chose to use your SS#, as others said, and apply wholesale account somewhere, you would have to give them your SS#.

Now they have your SS# and all your personal information..

Bad idea...To many thief's out there!!!

Get the tax ID#.. It is well worth keeping you personal information, personal.

[Cissy]

Some wholesalers will require a Federal EIN (which is the # you would be assigned if you are going to be deducting federal payroll taxes....or your SSN if you aren't applying for EIN.) I had to look back on my applications and I did have to list my SSN (not the sales tax #) It they do require your SSN and you don't want to give it, then it would be a good idea as others mentioned, to apply for a Fed EIN ( # different than your SSN). Hadn't thought of the identify theft angle when I posted. Good suggestions.

[candlelady]

I am a sole proprietor and have a sales tax id # which is only for the purposes of paying the state their SALES TAX that I collect from MY IN STATE customers. Texas does not require me to collect taxes from OUT OF STATE customers. I am a Dba, Carrie Dittert dba Cat Spring Candles and I'm identified by my SS# since I am an individual aka sole proprietor.

I won't require an EIN since I do not withhold any taxes, etc... from employees. The employee I do hire, is only working with me during the holidays. I pay her contract labor and she gets a 1099.

But, each state is different, so check out what YOUR state requires for you. Normally, you can go to the State Comptrollers office, which is who would normally handle that issue.