Does your Alabama business need a tax ID? How can you tell for sure? Setting up and running a business properly can be confusing, no matter what type of business you have. Sole proprietorships and partnerships tend to be more simple than limited liability companies (LLCs) and corporations but they all require at least some paperwork to get started legally. This can be confusing to a new entrepreneur, and time consuming for a busy one. This article will teach you what to expect from obtaining official tax ID numbers and how to get one as quickly and painlessly as possible.
Steps to Applying for an Alabama Tax ID (EIN) Number
- Application Information
- Get an Alabama Tax ID Quickly Using the Online Application
- Get an Alabama Tax ID via Traditional Methods: Phone, Mail and Fax
- How Do I Get a Tax ID Number?
- What Is an Alabama Sales Tax ID Number?
- Alabama State Tax ID Number: What It Is and How to Get One
1. Application Information
Getting a tax ID number requires you to fill out an application, providing answers to several questions about you, your business, and any other founding members of your business. While there are several varieties of application methods available to you, you’ll always have to provide the same pieces of information.
For starters, you’ll need to provide the full legal names and legal addresses of each business partner you have (including you). You’ll also need to submit their
social security numbers (SSNs). If you’ve gathered this information in advance, you can complete the application much faster than you’d otherwise be able.
2. Get a Tax ID Using the Online Application
Most business owners are interested in getting their tax ID numbers as quickly as possible. They don’t want to spend time with an inconvenient or sluggish method; instead, they want their business to get started and operate legally in record time.
If this is your goal, the best available application method is applying online. While there are several traditional tax ID application methods, like applying over the phone, by mail, or by fax, it’s much more efficient to apply online. Instead of relying on business hours, you can apply online 24/7, from any device that has an internet connection. Once started, you should have no trouble understanding or navigating the form. If you know all the required pieces of information from you and your business partners, you should be able to finish the application in just 5 minutes. Then, you’ll enjoy the quick turnaround speed of the online application. Most entrepreneurs receive their tax ID via email just an hour after they finish the application.
3. Get an Alabama Tax ID via Traditional Methods: Phone, Mail and Fax
By contrast, traditional application methods for your tax ID are agonizingly slow. If you wished, you could apply via mail or fax, filling out a paper application and sending it in through one of these two channels. You could also answer the questionnaire with a live representative, over the phone.
These methods will confront you with the same questions as the online application, but they’re less convenient and they take longer. Most importantly, they take longer to process; rather than waiting a mere hour to get your tax ID, you’ll have to wait up to 4 to 6 weeks.
4. How Do I Get a Tax ID Number?
If your Alabama business needs a tax ID number, there are several potential methods you could use to get one. How can you tell if you need one? First, understand that the general term "tax ID" usually refers to a federal tax ID number. This is also called an employer identification number, or EIN. It’s a 9-digit unique number assigned to businesses by the federal government, once they register officially.
You’ll need a federal tax ID number if you’re going to hire employees, or if your business has multiple members (like a corporation or partnership). You’ll also need one for most financial functions; you’ll need a tax ID number to apply for a business bank account, a business loan, or a line of credit. Most Alabama businesses will need one.
In the registry process, you’ll need to provide several key pieces of information on your business, including data points on you and your founding business partners. However, there are many methods you can use, including applying by phone, mail, or fax. One method is better than all the others: the online application method. It’s much faster and more convenient, giving you the potential to get your tax ID via email in an hour or less.
5. What Is an Alabama Sales Tax ID Number?
You may hear the term "tax ID" referring to a different number, and one that functions on a state level instead of the federal level. This number is called an Alabama state tax ID number, or an Alabama sales tax ID number.
Regardless of what you call it, this is a unique ID number for your business that functions at the state level instead of the federal level. There are several conditions that could require you to need one, and they differ from the requirements of the federal tax ID number. However, most Alabama businesses will need both a federal tax ID number and an Alabama sales tax number.
If you’re selling taxable goods and services in Alabama, then unsurprisingly,
you’ll need a sales tax ID number. If you’re going to owe special taxes on regulated goods like alcohol or tobacco in the state, you’ll also need one. Any business that hires Alabama employees will also need a state-level tax ID.
6. Alabama State Tax ID Number: What It Is and How to Get One
Let’s say your business needs an Alabama state tax ID number. How can you get one?
This application will require you to submit a federal tax ID number, so you’ll need to get one now if you haven’t yet. Use the online federal tax ID number application; that way, you can receive your tax ID in an hour or less.
From there, you can apply through a traditional method, or use the online application method. Applying online is the wiser choice, and is recommended for all business owners due to its speed and convenience. It takes a bit longer than the federal tax ID number application, requiring 4 to 6 weeks to process, but the online application is still better than the alternative.