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Numbers are everything in business. For new business owners, the taxpayer
identification numbers the IRS uses to process your returns are very
important.
The two most common kinds of taxpayer identification numbers are:
Social Security Number (SSN), found in the format of
123-45-6789 and issued to individuals. If you have employees, you must have
record of their SSN.
Federal Employer Identification Number (FEIN),
found in the format 12-3456789 and issued to individuals (sole proprietors),
partnerships, corporations, and other entities.
You must include your taxpayer identification number (SSN or FEIN) on all
returns and other documents you send to the IRS. You must also furnish your
number to others who need to identify you on any returns or documents they
send to the IRS. If you do not furnish your identification number as
required, you may be subject to penalties.
Employer Identification Number (EIN), found in
various formats and issued to individuals (sole proprietors), partnerships,
corporations, and other entities. This number is assigned by state agencies.
It is possible to be assigned an ID for State Income Tax and a separate ID
for State Unemployment Tax.
If you make payments to someone who is not your employee, and you must
report the payments on an information return, get that person's SSN. If you
make reportable payments to an organization, such as a corporation or
partnership, you must get its EIN.
To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer
Identification Number and Certification, found at
www.irs.gov.