4: Get federal and state tax ID numbers

Your state tax ID and federal tax ID numbers — also known as an Employer Identification Number (EIN) — work like a personal social security number, but for your business. They let your small business pay state and federal taxes but do you need one?

Get a federal tax ID number

Your Employer Identification Number (EIN) is your federal tax ID. You need it to pay federal taxes, hire employees, open a bank account, Links to an external site. and apply for business licenses and permits Links to an external site..

It's free to apply for an EIN, and you should do it right after you register your business Links to an external site..

Your business needs a federal tax ID number if it does any of the following:

  • Pays employees

  • Operates as a corporation of partnership

  • Files tax returns for employment, excise, or alcohol, tobacco, and firearms

  • Withholds taxes on income, other than wages, paid to a non-resident alien

  • Uses a Keogh Plan (a tax-deferred pension plan)

  • Works with certain types of organizations Links to an external site.

Apply for an EIN with the IRS assistance tool Links to an external site.. 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. 

Change or replace your EIN

If you already have an EIN, you might have to change or replace it with a new one if certain changes have occurred with your business.

Types of business changes that might require you to change or replace your EIN are:

  • Name change

  • Address change

  • Changes in ownership 

  • Changes in management 

  • Change in tax status

Your requirements will depend on your business structure and the kind of change that occurred. Check with the IRS Links to an external site. to determine exactly whether you need to change or replace your EIN.