When you do work, to get paid, you need to have a tax ID number. When you work for a company, you use your Social Security number and the company takes care of all the details for you. But when you have a business or are self-employed, this is an important task you will need to take care of yourself.
If you are self-employed as a contractor or if you do business under your own name as a sole proprietor, you do not have to get a separate tax ID number. You simply use your Social Security number as your identifier for tax purposes. This makes things easier, although it also opens you up to personal liability in any business dealings. You will need to supply your Social Security number to any entity you perform work for. If you sell items, you will need to provide it in order to get a sales tax license or any other kind of tax permit you need.
If your do business under a separate entity and you have filed paperwork to incorporate as a limited liability corporation, partnership or some other business entity, you will be issued a federal tax ID number, which is a five-digit number similar to a Social Security number. It is a unique identifier for your business, and you will use it for all tax purposes, such as filing income tax returns and getting sales tax licenses. You also will need to use this number for non-governmental transactions, such as opening a business bank account or getting a business credit card.
Making sure to file taxes is important, whether you are self-employed or have a business that employs several people. Failure to do so can lead to heavy fines and even jail time if it’s determined your failure was intentional.
You may also learn more about this topic by checking Georgia tax id.