How to get a business tax ID in Texas?

Filing for a business tax ID comes along with running a business in Texas. You may also come across this term known as an Employer Identification Number or a Texas Sales Tax Permit. This is something you will need to complete federal tax filing, payroll, bank account setup, and sometimes to collect sales tax throughout Texas.

1. Federal Tax ID (EIN) via the IRS

A federal Employer Identification Number (EIN) is assigned by the IRS and is required for most businesses. It serves as the unique tax identifier of the business at the federal level. Here's how to obtain one:

• Online Application: This usually is the fastest way that the IRS provides for an EIN application. The applicant has to complete his or her application in one session; this usually takes about 15-20 minutes. Once approved, an EIN is issued immediately.
• Eligibility: It must be located in the United States and the primary applicant-owner or responsible party must have a presently valid Social Security Number or ITIN.
• Alternate means of application: Firms can apply via the mail or by facsimile using the IRS Form SS-4. Both of these are considerably more time-consuming compared to the online application.

2. Texas State Sales Tax Permit, if applicable

To sell products or offer taxable services, a business should obtain a Texas Sales Tax Permit from the Comptroller of Public Accounts, Texas. This permit grants the business the right to collect sales tax on taxable goods and/or services, if applicable, from customers and pass it to the state.

• Application Procedure: The permit application can be made online on the Texas Comptroller's website by utilizing the Webfile System or by mailing Form AP-201, Texas Application for Sales and Use Tax Permit.
• Details to be Provided: The applicant has to provide details related to the structure of the business, ownership, federal EIN, and the estimated amount of taxable sales.
• No Application Fee: There is no application fee charged for the Texas Sales Tax Permit. However, it is mandated for the business to collect and remit the sales tax wherever applicable.

Both the Federal tax ID number and the state are very crucial for business in Texas, as both provide compliance at federal and state levels. With these identifiers, businesses would have no problem operating in Texas and meeting their tax obligations.