What is a Tax Id Number

 A tax id number is a number that a government issues to identify a business for various tax purposes. 

There are five main tax id numbers: 

1. A federal tax id number

2. A State Employer Tax Id Number

3. A Sales Tax Id Number

4. A County Tax Id Number

5. A City Tax Id Number

 A federal tax id number is issued primarily to partnerships, corporations, and employers.   A sole owner can obtain one and use it as a business tax id number to be used in applications. For example, you are starting "Online King" an ebay online business and you have an employee.  You will need a federal tax id ( as well as a state employer number ) to pay employment tax.    

 Partnerships will need one because the partnership must be indentified independently from its partners and corporations need it as a corporation id but it can also be used as an employer number for the corporation as well as the partnership.

A State Employer Number  ( as well as a federal tax id number ) is required for all businesses that have or will soon hire employees .

 A sales tax id number is required in two cases:

1. If you are a wholesaler so you can sell without charging taxes.

2. If you are a retailer that wants to buy wholesale or sell online and collect taxes.

 A County Sales Tax Id is required in some states for the purpose mentioned in the state sales tax id case

A City Tax Id or business tax receipt registration number is required from most cities in the United States.

If You Are Starting a Business, You Need The Following  Tax Id Numbers:

1.  All businesses need a business tax id registration number also called a business license.
2. All businesses that want to buy wholesale ( i.e., buy without paying taxes), or sell retail and collect taxes,  need a State Sales Tax Id Number also called a seller's permit or resale tax id number.
3. All businesses that have employees, need a federal tax id number ( also called an irs number) and a state employer tax id number.
4. All businesses are advised to get a federal tax id number and use it as a business id number.  Note that a federal tax id number is also a federal employer number as well as a business id number.
5. All corporations, partnerships, and llcs, are required to get a federal tax id number to use as a business tax id ( though, even sole proprietors can use it as a business tax id number if they so choose).