Small business tax question

[Rajah]

Anyone know... what's the difference between a Tax ID and a Sales Tax ID? I went to the tax office and got a tax ID that I thought was what I needed to open the checking account for my cross stitch design company, but when I got to the bank they said that was a *different* ID. I'm now confused... Can anyone shed light?

Thanks!

 

[mudnuri]

I know we need our Federal ID number for our accounts etc.... could that be what they mean? We had our accountant/lawyers handle all of this stuff though, I do know they sent some forms to the feds and got our ID that way.

Brandy

 

[mark & sandra]

If I'm not mistaken, the bank needs a copy of your business licence or certificate of authority to keep on file and open your account. Your tax I.D. # is for tax filing purposes and end users pay sales tax on items purchased, if you're buying an item to use in the making of an item or to resell it later you can fill out a resale certificate with the person you are buying from and this will allow them to sell you something without charging you tax.

 

[Rajah]

Okay, my head is spinning. LOL!

Do I have this right:
If someone wants to pay me for something, they need the ID the bank gave me (not the account number, but *that* tax ID)
If I want to buy something that will then be used in my patterns, I use the ID I got at the tax office, the sales ID.



I thought I understood all of this until we got to the bank and they said that wasn't the right tax ID number. We had our DBA so were able to open an account with no problem, but now I'm totally confused.

 

[mudnuri]

OKay hold on a minute...

DH owns a store- retail...

NOBODY that buys something from him gets his Federal Tax ID...

Manufacturers that he wants/gets a line of credit with, get his Federal Tax ID.

The Federal Tax ID is the ID that the Feds give you in reference to INCOME TAXES......etc..

I believe a State Tax ID is something that you would get if in fact your state has PERSONAL/BUSINESS INCOME TAX??....

The bank does not have nor did they ask for a Business License...all they wanted was the FEDERAL ID NUMBER, because it was in a BUSINESS name...had it been a DBA, we would have used our SSN...since it's an LLC, not a DBA, we used the FED ID NUMBER...


Im not sure what your bank gave you? What type of ID?? If someone wants to pay you for something, cash, check or charge baby, they DONT need any of your bank numbers......

Brandy

 

[cgcw]

I file a return for my own business -- small home daycare. Everything is done under my SS#. I do not have a Tax ID# and will not get one -- as I am not incorporated and have no plans to go that route. According to my accountant, all I need to do is provide my daycare families with my SS# and claim the income. My checking account for the business is in my name.

 

[Kirby]

I probably need my husband here but I'll see if I can help.

My husband had a plumbing company as a DBA and was given a Federal Tax ID number for filing taxes (payroll, federal, etc.). He could also use his social security number had he wanted to instead. When he incorporated, he received a new tax ID number. His accountant took care of it.

A Sales Tax ID number is for when you purchase something and are going to resale it and charge sales tax. Like, for instance, if my husband bought a sink from a plumbing supply company and then sold it to a homeowner and included tax.

 

[Rajah]

No, I was just being confused. My dad explained it and I think he made sense. It was two different IDs, one being for federal income tax to be reported along with personal taxes, one was a sales tax ID, which shows us as being tax-exempt on certain things. So I *think* I understand it now.


BTW, according to the lady at the bank, unless you've incorporated, most of the time people use their SS# *as* their "tax ID".