View Full Version : OT - What are the implications of getting a Tax ID number?
09-28-2005, 08:55 AM
I am interested in getting one to buy wholesale florist supplies. What are the ramifications (if any) of me getting one?
Do I just apply online, do I have to pay for one, how does it affect my regular tax return?
Is there anything else I need to be aware of?
09-28-2005, 10:55 AM
Now I might be wrong, but it's my understanding you actually have to establish a company to recieve a tax ID number. It's not that difficult or expensive to do, but it depends on your individual state laws. DH has an LLC with a partner and as I recall, it was easier and less expensive to set up than we expected, although we pay the CPA quite a bit to do the company taxes.
Your state (.gov) website should be able to walk you through the process.
mom to one and one on the way!
"And children are always a good thing, devoutly to be wished for and fiercely to be fought for."
I may be wrong too (sorry Bethany) but I DON'T think you need to establish a business to apply for a TIN. This is something that is really state law specific. It shouldn't affect your (federal income return) 1040 unless you are selling what you make/buy. But you will most likely have to file a state sales/use tax form periodically (again, depending on the state). Basically you'd have to charge yourself use tax for anything you buy wholesale you are not taxed on. Use tax is usually the same rate as sale tax, but again (broken record) it ALL depends on state law. Please don't take any of this as definite; I really think you'd be able to get all your answers on your state's dept. of taxation website.
Why I really wanted to respond is b/c I have a wholesale account with my local floral wholesaler. My mom is a designer who has a business, a TIN and a wholesale floral account. I was just using her account but it became an accounting PIA. SO, I called the wholesaler to see if there was anything I could do. They were happy to have my business. Basically they just set up an account for me under my name and address (didn't have to give them a SSN or TIN; technically your SSN is a TIN, but I wouldn't recommend using it for that purpose if you do later need a TIN ). They did not give me a credit account so I had to pay when I was there and they set up my account to charge me sales tax so there was no taxation issue.
I hope this makes sense, I was up all night and I'm about to take a nap but PM me if you have any questions. I used to work in tax (many moons ago) but not really with state or sales tax issues, so it's very murky water for me. HTH.
09-28-2005, 12:31 PM
There are 2 different types of Tax ID numbers. One is for indiviuals (ITIN), and one is for businesses (EIN). I found some general info about it from the IRS website:
You can apply for EINs via phone, FAX, mail, or internet. I'm not sure, but I would guess that the IRS would explain any tax implications of having an EIN (if there are any) through their Business & Specialty Tax Line. That number is 800-829-4933, and the hours of operation are 7:00 a.m. to 10:00 p.m. local time, Monday through Friday.
09-28-2005, 12:33 PM
I've had a sales tax & use certificate for NJ since i was i think 15 or so.....not sure if that's the same as Tax ID #! Either way it was easy to apply for and I didn't need an official company.
I've got a great accountant that's close to you if you have any questions!
mom to William
LKibala at optonline dot net
Since you are worried on how it will impact your federal tax return, you are honestly better off if you talk to your accountant or find one who would answer your questions.
As far as buying from wholesalers as a business, you have to have a (the?) State Tax Registration. This will give you a tax exemption number appropriate for your business. In my state, you can apply for the business licence later, not necessarily at the same time when you register for the sales tax. What I have said so far it may vary between states, you need to check the requirements in yours.
You can make business with your own ss. Your company will be considered by the IRS a sole proprietorship. When you do your income tax, whatever you have earned will go in an attachment to your form (whatever form you will have to use). With a TIN, the federal tax return is probably filed separately since the number is different than your ss. I know that if you have a LLC your personal income tax and that of the LLC will be filed separately.
The above is the way I understand it. Sorry I cannot be more help.
09-28-2005, 02:19 PM
It is very easy to get one online. Just go to www.irs.gov and do a search for Form SS-4. There is a short form that you fill out, submit, and instantly get an EIN. Then, if you are a sole proprietor(business owned individually) any earnings or losses will be reported on Schedule C of your tax return. There is a box on Schedule C where you are asked to enter your tax id number. If you do not have any earnings or losses, there is no need to file Schedule C, but you may get a notice from the IRS saying that nothing was filed. You will then have send back the notice indicating that there was no business activity during the year. This is kind of a pain, and some say may get you flagged for an audit. At my company, we apply for EINs all the time that do not get used because a deals fall through. It is no big deal, but we do get notices from the IRS asking why no tax return (for a corporate entity) was filed. Sales and Use taxes are completely a state issue, and I cannot accurately speak to those requirements. I think that if you do not use the purchases for a resale purpose, you could potentially be audited and assessed tax by the state.
09-28-2005, 04:23 PM
On one of the indexer's discussion groups, everyone was talking about this lately. All the indexers were saying they use one when invoicing clients as not to have their SS # floating around everywhere.
09-28-2005, 08:00 PM
Check with the NJ Dept of Revenue. You are required to file for a state tax/resale number (not the same as a Federal EIN number). You are also required to pay sales tax on purchases made for personal use. I know several individuals in MA that have been investigated for tax fraud for using a resale/tax number for personal use only.
09-29-2005, 02:28 AM
An ITIN is valid ONLY for IRS purposes. ITINs are only used for people who can NOT get social security numbers such as illegal aliens, etc who are filing federal tax returns.
09-29-2005, 08:54 AM
You're right about that fact. I only brought up ITINs because we might have had to get one for DS if he couldn't get a SSN by the end of TY2005. Besides, I'm not fully aware of Marisa's status and situation, so I wanted to bring up all possible options and let her figure out which was right for her situation.
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