Do I Need a Federal Tax Identification Number?

This is a familiar question a client or potential client will ask us.  Some of the more common situations in need of a tax identification number are:

  • Starting a business that will have employees
  • Having a corporation
  • Having a qualified retirement plan with $100,000 or more of plan assets
  • Opening an estate
  • Having a trust that is required to file a tax return

If you have your own unincorporated business and don't have any employees, you are not required to have a federal tax identification number.  You can use your social security number. 

Even if you are not required to have a federal tax identification number, you may choose to get one.  Your bank may require it as a condition of opening a business bank account.  Also, when you render services to a customer, the party paying for the service is required to issue a Form 1099.  To properly complete Form 1099, the customer will request information such as your name, address and social security number.  If you have a tax identification number, you won’t be required to give out your social security number. 

How do you get a Federal Tax Identification number?   Complete IRS Form SS-4 (Application for Federal Tax Identification Number).  This number may be obtained by regular (snail) mail, fax, or online.

ACTION ITEM:  Understand when you are required to have a federal tax identification number and when it might be a good idea.

Thomas F. Scanlon, CPA, CFP®

About the author:

Karen Tedford,

4 Comments on "Do I Need a Federal Tax Identification Number?"

  1. security training
    Jul 22nd, 2010

    I have read a couple of articles on your blog and can say it was really interesting.

  2. Tyson Husain
    Jul 22nd, 2010

    Thanks for sharing this. I’m always looking for valuable resources to send to clients and my colleagues, and this post is certainly worth sharing!

  3. ford expert
    Jul 28th, 2010

    Amazing post, thank you!

  4. Gayle Schrenk
    Aug 3rd, 2010

    Great site!!!

Comments closed.

Web Statistics