Starting a business. It’s time to register and get a California Employer Identification Number (EIN) and California state tax ID numbers. The Identification Numbers are used to register a business with the federal and state government in order to pay sales taxes, payroll taxes, and withhold taxes from employee wages.
Let’s dive in and see when they are required, when you need to use them, how to get them and the cost of getting them.
Employer Identification Number (EIN)?
The Employer Identification Number, EIN, also known as the FEIN or Federal Employer Identification Number. The FEIN is a unique 9 digit number that identifies a business, similar to a social security number.
The EIN is needed for California business entities that are sole-proprietorship, single-member LLC (with employees) registered as a partnership, corporation, or multi-member LLC, trust, estates, real estate mortgage investment conduits, and non-profit organizations. The EIN is optional for sole-proprietorship and single-member LLC’s that do not have employees, the owner’s social security can be used instead.
EIN Required:
To hire employees, paying payroll taxes, income tax withholdings, create a 401(k), purchase existing business, create a partnership or LLC, file bankruptcy, unemployment taxes, and to prevent identity theft.
EIN Uses:
You can open up a business bank account, apply for a business license and permits, and filing tax returns.
Apply for an EIN
Visit the Internal Revenue Service (IRS) website, during normal working days and hours.
It takes less than 30 minutes to file the EIN online. The EIN will be given within minutes.
Other options, include by mail and fax. Download the form and follow the instruction provided on SS-4 form.
COST: Free
Information to Provide for an EIN
Make sure you have the following information to make the process smoother and faster.
- Legal Business Name and Address
- Name(s) of the owner(s) or principal officer(s)
- Name(s) and contact information of the owners, directors, officers or members
- Type of business and what description of products/services the business does
- Date the business was started or acquired
- Closing month of the entity’s accounting year (Recommend December 31st)
- Number of employees expected to be hired
- Contact information
Multiple EIN
If you already have an EIN for your small business but want to have multiple ones for different parts of your business, here are some tips. You can only create one (1) EIN per day.
Reasons to have multiple EIN is to separate your business entities. For example, a real estate agent can have one EIN for his rental property business, a EIN for his real estate agent business, and even a EIN for his construction business. Just note, that each EIN should have its own bank account to help separate your revenue and expenses. Otherwise, come tax time, you will be spending hours gathering everything and possibly loosing valuable qualified deductibles.
