What is a Federal Employeer Identification Number?

All businesses with employees are required to obtain a Federal Identification Number from the IRS. Usually, a sole proprietorship without employees can use a social security number as identification until employees are hired. Partnerships must also obtain an identification number. If the partnership has no employees, it should be indicated on the form that the number is for identification purposes only, not to meet quarterly and yearly payroll reporting requirements. If you receive a Federal Employee Identification Number, the IRS may send you quarterly and year-end tax forms. These must be filled out and returned, even if you have no employees. In accordance with IRS regulations you are liable for federal withholding taxes, F.U.T.A (Federal Unemployment Tax Act.), and F.I.C.A (Federal Insurance Contribution Act) if you have any employees. The IRS will provide kits for small businesses, information on how to estimate tax payments and complete tax forms, in addition to the Federal Identification Number form (#55-4). The IRS Hotline is 1-800-829-1040.

Posted on November 17, 2016