How Do I Get a Tax Identification Number?

Burning question for those wanting to make money online by starging their own Internet home-based business.

How do I get a tax identification number?  The answer is short and sweet.  After you read the answer, please pay attention as I explain why this may not be necessary for you.

Here it is.  The SBA (Small Business Association) says,

For a Federal Tax ID number, please contact the Internal Revenue Service for Form SS4. This Form is available through their web site at http://www.irs.gov/pub/irs-pdf/fss4.pdf.  You may call the IRS at 1-800-829-1040 and ask for the Small Business Tax Kit #454.

Tax information for starting a business can be found by going to http://www.irs.gov/businesses/index.html. You will need to contact the Department of Revenue for state taxes (if any). Please consult your local telephone directory in the "State Government" section for the office in your state.

That last line about consulting your own Department of Revenue is pretty important if you are going to need a sale tax permit.  I won’t go into this right now, but getting such a permit is free and generally very easy.  In many cases, such as in my State, Iowa, you can get it online and be up and running in 15 minutes.

Why you may not need a Tax ID number.  Generally speaking, a small home business that does not have employees will not need a Federal Tax ID.  A sole proprietorship generally does not need an EIN, or Employer Identification Number.  If you are going to incorporate, you may need an EIN, or Federal Tax ID.  Most of us, operating as single or two person home, Internet businesses, will not need an EIN to start with.

Also, do not automatically buy the general advice about incorporating as an LLC.  Although there is no harm in doing so, it may simply not be necessary.  Just about all of the business advice I see out there for Internet marketers tells you to incorporate.  Talk your plans over with an business attorney to figure out the best course of action for you.  Starting a business, especially your own home Internet business, is not a case of one size fits all.  Every situation is a little bit different. Please don’t let the self confessed Internet pundits tell you otherwise.

Update on Writing Your Business Plan

No matter if you are running a tiny, one person, closet-based Internet home business, you can still benefit from writing a business plan.  In fact, having a business plan (at least of some sort) is generally considered essential to long term success.

I wanted to mention that I’ve uploaded a series of articles explaining the parts of a business plan and why the individual sections are important.

The business plan is generally something you write with the idea of presenting it to financial advisors and prospective funding sources to outline the business and its factors for success.

However, there is another reason for writing a business plan.  The business plan is an excellent analytical tool.  Whether you have already started your business or are still in the thinking stages, a business plan will force you to think and analyze it in detailed, crystal clear clarity.

If the whole idea of a business plan sounds too intimidating, no problem.  Just start setting up your business and get on with making money online.  Business, after all, is action.  Writing a business plan should not be something that bogs you down.  Just start putting the plan as it exists in your head into action.  Over time, you will begin thinking of your project in terms of a business and writing a business plan will begin to make more sense and no longer be so intimidating.

Writing a Business Plan–Basics You Must Know

Whenever I start publishing about the need to understand something about business, I worry that the subject may seem so overwhelming that you might just give up.  Remember that business is action.  While business planning is important, the point of the planning is to help you take effective action, not to bog you down.   Read more

Essential Elements of a Good Business Plan

Even if you are starting your home Internet business as a single person that you are running from your bedroom, you still need a business plan.  I’d like to take a moment and suggest what I think are some of the essential elements of good business plan.  also keep in mind that a business plan may be a work in progress.  In fact, you may have started on the Internet trying to make money without ever thinking or having thought of yourself as a business.   You may have discovered that over time, bit by bit, you began thinking of your Internet activities in the context of a business.  Without realizing it, you started developing and may still be developing a business plan.  So a business plan can originate and take shape from practical day to day activities.  And it can change. Read more

Your Internet Business–Strategic Planning

In the context of this blog, starting an Internet business belongs to same subject family as starting a small home business.  However, starting a home Internet business is not necessarily the same thing as making money online.  Of course, you and I start our home Internet business with every intention of not just making money online but making gobs of it. Read more