How to Get a Tax ID Number in PA: A Step-by-Step Guide

One of the first steps you should do when opening a new business in Pennsylvania is to apply for a tax ID number. This distinctive nine-digit identifier, also known as an Employer Identification Number (EIN), is given to firms by the Internal Revenue Service (IRS) for tax-related purposes. Here’s how to obtain a tax ID number in Pennsylvania:

Determine if You Need a Tax ID Number in Step 1 A tax ID number isn’t required for all companies. Use your social security number (SSN) if you are a sole proprietorship or a single-member LLC without any workers. However, you will require an EIN if you have staff, conduct business as a partnership, corporation, or LLC, or if you must file specific federal tax returns.

Step 2: Online Tax ID Number Application Applying online on the IRS website is the simplest way to obtain a tax ID number in Pennsylvania. This procedure is unrestricted and free. Visit the IRS website and select the “Apply for an EIN” button to submit an application. After that, you will be asked a number of questions about your company, including its name, address, and legal status.

Step 3: Mail or Fax Your Application for a Tax ID Number You can also apply for a tax ID number via mail or fax if you’d rather not do it online. To do this, print off Form SS-4 from the IRS website, complete it, then mail it or fax it to the specified address or fax number. If you apply by mail or fax, it could take up to four weeks to get your EIN. The simplest and most typical type of business formation is the sole proprietorship, which has a number of drawbacks. It does, however, have significant drawbacks. The biggest drawback is that the firm owner is individually responsible for all debts and responsibilities. This means that the owner’s personal assets, such as their home or car, may be at danger if the company is sued or unable to pay its debts. Taxation of Sole Proprietorship Since a sole proprietorship is not a distinct legal organization, the owner’s personal tax return must be used to declare business earnings and costs. Taxation that is “pass-through” in this case. On the business profits, the owner pays income tax at their personal rate. The employer and employee shares of Social Security and Medicare taxes are also paid by them in the form of self-employment taxes. Those that run a sole proprietorship A sole proprietorship’s owner is referred to as the single proprietor. They make all of the choices and have total power over the company. All parts of the company, including management, finances, and operations, are under the owner’s control. Those working for a sole proprietorship Employees are possible in sole proprietorships. The owner is in charge of paying their salaries and abiding by all rules and regulations pertaining to employment. However, the company will require an EIN if it employs employees.