Your state tax ID and federal tax ID numbers — also known as an Employer Identification Number — work like a personal social security number, but for your business. They let your small business pay state and federal taxes.
Your EIN is your federal tax ID. You need it to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.
It's free to apply for an EIN, and you should do it right after you register your business.
Federal Tax ID Number
Your business needs a federal tax ID number if it does any of the following:
Files tax returns for employment, excise, or alcohol, tobacco, and firearms
Operates as a corporation of partnership
Uses a Keogh Plan (a tax-deferred pension plan)
Withholds taxes on income, other than wages, paid to a non-resident alien
Works with certain types of organizations
Apply for an EIN with the IRS assistance tool. It will guide you through questions and ask for your name, social security number, address, and your "Doing Business As" (DBA) name. Your nine-digit federal tax ID becomes available immediately upon verification.
State Tax ID Number
The need for a state tax ID number ties directly to whether your business must pay state taxes. Sometimes, you can use state tax ID numbers for other functions, like protection against identity theft for sole proprietors.