Filing & Paying Business Taxes

Employer identification number (EIN).

You must have an EIN to use as a taxpayer identification number if you do either of the following. Pay wages to one or more employees. File pension or excise tax returns.

If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. You can apply for an EIN: Online at www.irs.gov/businesses/small. The EIN is issued immediately once the application information is validated. By telephone at 1-800-829-933 from 7:00 a.m. to 10:00 p.m. in your local time zone. By mailing or faxing Form SS-4, Application for Emtions ployer Identification Number.

You may need to get a new EIN if either the form or the ownership of your business changes.

When you need identification numbers of other persons. In operating your business you will probably make certain payments you must report on information returns. You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. You must include the payee’s identification number and your identification number on the returns and statements.

Employee. If you have employees, you must get an SSN from each of them. Record the name and SSN of each employee exactly as they are shown on the employee’s social security card. If the employee’s name is not correct as shown on the card, the employee should request a new card from the SSA. This may occur if the employee’s name was changed due to marriage or divorce. Form W-4 is completed by each employee so the correct federal income tax can be withheld from their pay. If your employee does not have an SSN, he or she should file Form SS-5 with the SSA.

Other payee. 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 must report 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. A payee who does not provide you with an identification number may be subject to backup withholding.

This column is offered as a public service with the understanding that each person's tax situation is different; and that you should consult your CPA before taking any action based upon comments made in this article. Call me and I will be happy to explain my “CPA Quality Tax Preparation at H&R Block Rates”.  I can be reached at 825-2771.

Continued next week