Starting a business is a big step. Along with all the things you have to worry about such as marketing your project or service, finding a place for the business and attracting customers, there also are a number of legal concerns. One of those is whether you need to have a tax ID number.
A tax ID number is like a Social Security number for your business. It essentially is a unique identifier the government uses for tax purposes. There are a number of scenarios in which you will need a tax ID number.
If you set up a separate entity to do business, such as an LLC, then that business needs a tax ID number. The tax ID number helps to ensure that any tax liability you incur in the course of doing business will be assigned to the business entity you have created.
If you are selling a product, then you need a tax ID number for sales tax purposes, even if you are doing business under your own name and have not set up a separate entity. Most states and cities require businesses to pay sales taxes due monthly, rather than quarterly or annually as with income taxes.
The one scenario where you can go without a tax ID number is if you are working as a sole proprietor and not selling a product. For example, if you work as an independent contractor and offer your services for hire, you don’t need a tax ID number as long as you have not incorporated a business. In that case, your own Social Security number acts as a tax ID number.
If you plan to start a business, it’s important to check with your state and/or city to see what the requirements are regarding a tax ID number.
See georgia tax id for more information.