in owning a small business do you have to?

Question

have a federal id number or ein number? if so why? please explain.

i am the only employee because i have a home based business

Answer 1

NOT NECESSARILY. According to the IRS, you only need an EIN if:

- you have employees
- you operate your business as a corporation or a partnership
- you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms
- you withhold taxes on income, other than wages, paid to a non-resident alien
- you have a Keogh plan
- you involved with any of the following types of organizations: Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
Estates
Real estate mortgage investment conduits
Non-profit organizations
Farmers' cooperatives
Plan administrators

So if you are operating as a sole proprietorship, you don't need an EIN and can simply use your SSN

Answer 2

The short answer is that you don't need an EIN unless you have employees. You may need a resale license but that is a state issue. A resale license will help you avoid sales tax on your purchases.

Answer 3

Your federal number will be the same as your state number.

Answer 4

Yes. Its legally required for every corporation or legal entity. You probably also have to register your corporation with your state. May need a sales tax license. May need a local business license. etc.