If you’re planning on starting a business in California, or if you already have one, you should know you’ll probably need a tax ID number (EIN) to operate legally. Many types of businesses, like corporations and limited liability companies always need a tax ID number to operate legally. Others, like sole proprietorships, need a tax ID most of the time. In this guide, you’ll learn the reasons why you need a California tax ID number and how to get one as quickly as possible.
Steps to Apply for a California Tax ID (EIN) Number
- Prepare Information for Your Tax ID Application
- The Fast Route: Apply Online for a California Tax ID
- Apply for a California Tax ID by Phone, Mail or Fax
- Do California Businesses Need a Tax ID Number?
- How Long Will I Wait to Get a Tax ID Number for a California Business?
- California State Tax ID Number: What It Is and How to Get One
If you need to get a tax ID number, you’ll need to register with the government, which involves filling out an application. On this application, you’ll need to provide a few pieces of information on yourself and your founding business members. If you gather this information in advance, you’ll be able to complete the application much faster, ultimately getting the ID number much faster.
For starters, you’ll need the full legal names and legal addresses of these founding members. You’ll also need to get their social security numbers (SSNs). Set this information aside.
Though you’ll follow the same overarching process no matter which application method you choose, there are several application methods available to you. The most efficient and most convenient method is to apply online. It’s also the newest and most advanced method.
You can use any device with an internet connection to access the online tax ID application. This instantly makes it more convenient than any traditional method. Once you pull up the form, you’ll see how intuitive and straightforward it is to complete; if you’ve gathered all the information on your founding business partners already, it should only take you 5 minutes to complete.
When you’ve submitted the form, you’ll need to wait to receive your tax ID number. Thankfully, the online method is incredibly fast. After submitting your completed form, you should receive your tax ID number in just an hour, via email.
You can get an EIN in just an hour if you apply online, but there are other methods available to entrepreneurs who choose to seek them. Most of these methods are traditional, and existed before the internet was readily accessible. If you choose to use them, you’ll answer mostly the same questions about your business, but in a less convenient format. You may find a paper application, then mail or fax it in. You may also speak with a live representative over the phone, engaging in a kind of interview. In any case, if you use a traditional method instead of the online application, it will take 4 to 6 weeks to receive your tax ID number by mail.
If you’re running a California business, are you required to have a tax ID number?
The answer isn’t firmly yes or no. There are several conditions that could require you to have a tax ID number, which in this case refers to a federal tax ID number. This number is also referred to as an employer identification number, or EIN.
For example, you’ll need an EIN if you’re going to hire any employees, or if your business has multiple members. This is the case if you have a partnership, corporation, or LLC with multiple members. You’ll also need a federal tax ID number for most financial purposes; you’ll be required to have one to apply for a business loan, open a business bank account, or open a line of credit for your business. Tax ID numbers are also typically required for applications for business licenses, permits, and other types of certifications. In other words, most businesses will need one.
Note that a federal tax ID number is different than a California state tax ID number, which you’ll need if you owe state-level taxes or are hiring employees in the state.
If you’re starting a new business in California, you’ll be interested in starting as quickly as possible. Accordingly, you’ll want to get your tax ID number very early in the business development process. So how long will you have to wait to get one?
That all depends on how you choose to apply. All application methods will require you to answer some basic questions about your business and its founding members, but some are strictly better than others. For example, if you choose to apply online, you can finish the application in mere minutes, at any time of day, and get your tax ID number over email in an hour or less. If you choose a traditional method, like applying by phone, mail, or fax, it will take you much longer to complete the application. You’ll also be stuck waiting 4 to 6 weeks to receive your tax ID number via traditional mail.
Most states issue their own state-level tax ID number, separate from the federal-level EIN. California is one of these states. You’ll need a California state tax ID number if your business is going to hire employees in the state of California, if you’re going to sell taxable goods and services in the state, or if you’re going to owe excise taxes, which apply to regulated goods like alcohol, gasoline, and tobacco.
Before you can get a California state tax ID number, you’ll need a federal tax ID number. Fortunately, you can get one in an hour if you apply online. Once you have it, you’ll have your choice of application methods, just like you did with the federal tax ID number. Again, the most efficient way is to apply online; if you do, you’ll get your state tax ID number in 4 to 6 weeks.