Running a hair salon can be very rewarding. You get to express your creative talents, help people feel beautiful, socialize with clients, and explore new ideas from the world of hair and beauty, but at the same time, you also have to manage business essentials, including obtaining tax identification numbers.
In particular, your hair salon needs a federal tax identification number called an Employer Identification Number (EIN). Keep reading to learn how to get an EIN for your hair salon.
Steps to Applying for a Hair Salon Business Tax ID (EIN) Number
- When Do Hair Salons Need an EIN?
- Information You Need to Apply for a Hair Salon EIN
- Responsible Party on EIN Application
- Employee Information Required on EIN Application
- How to Apply for a Hair Salon EIN Online
- Apply for a Hair Salon EIN Over Fax, Mail, or Phone
Most businesses need an EIN. Generated by the federal government, this tax ID number identifies businesses to the government on tax returns and other documents. Many banks also request EINs from businesses on paperwork for loans and applications. Your hair salon needs an EIN in all the following situations:
- You are hiring employees, and you need an EIN to submit payroll tax returns and payments.
- You are opening a bank account. To open an account in your business’s name rather than your own name, your hair salon needs an EIN.
- You’re changing the structure of your business. For example, you’re changing a sole proprietorship to a partnership.
- You purchased an existing hair salon. To establish the business as your own, you need a new EIN.
- You are setting up a pension plan for your employees. Eventually, you will need to submit tax documents related to the plan to the government, and you need an EIN for those forms.
- You are paying a foreign entity as a contractor. Although your hair salon doesn’t usually need to withhold taxes on non-wage income, you do have to withhold if you’re paying aliens (individuals, partnerships, corporations, etc)
Once you determine that you need an EIN, you should get together the information you need to obtain this number. Most of the information consists of basic details you already know about your business, but you may need to crunch a few numbers to complete parts of the application.
In terms of basic details, you need the legal name of your hair salon, its trade name if applicable, its address, and the type of business entity (sole proprietorship, partnership, corporation, etc). Keep in mind if your business is an LLC, you cannot select that as the type of entity. If you have a single-member LLC, you should select sole proprietorship, while a multi-member LLC is a partnership. However, if you have incorporated your LLC, you should select corporation.
You also need the name of the responsible party and their tax identification number. Typically, the responsible party needs to be a person, but there may be exceptions to this rule. If you are the responsible party, expect to receive correspondence about the hair salon from the government. You also need to note why you are applying for an EIN. The options are self explanatory, and if you don’t see your reason, you can write in a reason.
Near the end of the application process, if you are the responsible party, you need to specify if you have received an EIN in the past. If you have had an EIN, you need to provide that number on the application. If you need two or more EINs right away for your hair salon and another business or organization, you need to apply for them on different days. You can’t apply for multiple EINs on the same day.
Finally, here is where you may need to crunch a few numbers to complete your hair salon’s EIN application. When applying for an EIN for your hair salon, you need to provide information about your employees. The application requests an estimate of the number of agricultural, household, and other employees your hair salon is likely to employ over the next 12 months.
You also need to note the closing month of your accounting year, and whether or not you expect your employment tax liability to be $1,000 or less during the calendar year. You just need to provide estimates. You are not bound to these numbers if things change.
If you need an EIN for your hair salon quickly, the fastest option is to apply online. You can access an online EIN application through your web browser. You do not need to download any special software. To apply online, simply gather the information explained above, and find a computer or tablet with internet access.
Once you populate the EIN application with the required information, you should receive your EIN relatively quickly. In many cases, you can even receive an EIN on the same day that you apply or by the next business day. Once you have the number, you can start to use it on government forms and banking documents right away.
Don’t have internet access? Don’t need your EIN quickly? Just prefer doing things on paper? Then, you can apply for your hair salon’s EIN over fax or through the mail. Unfortunately, you can only apply over the phone if your hair salon is not based in the United States. If you were thinking about a phone application because you want to ask someone questions about the process of obtaining an EIN, you may want to find a service that helps businesses obtain tax ID numbers.
To apply through the mail or using a fax machine, you need to print a copy of the EIN application. Then, you need to fill out the application with the information explained above. Finally, you simply need to fax the application or mail it to the government. With a faxed application, you can receive your hair salon EIN within about four days, as long as you provide a return fax number. If you mail the application, you should expect to receive the number for your hair salon in a few weeks.