When starting a new business, most people are excited to get out and sell and market their product or service as soon as possible. While this excitement is understandable, it is important for entrepreneurs to ensure that they are complying with all relevant state and federal laws when they start doing business. Among the most important requirements with which a business must comply are those imposed by both state and federal tax laws. Failure to do so could have serious consequences, and could even end up putting you out of business. While these issues can be extremely complicated, the assistance of a small business attorney can help you be confident that you are doing everything “by the book” and not jeopardizing your chances of success in business because of some technical or administrative error.

The Importance of a Federal Employer Identification Number

A federal Employer Identification Number, or EIN, is a identifying number issues to businesses or business owners in order to identify returns filed with the Internal Revenue Service (IRS). Not all businesses are required to have an EIN, but in some cases it may be beneficial to have one even when it is not necessary. For example, banks often require an EIN to set up a business account, making it easy to keep business and personal assets separate from one another. Some of the circumstances in which an EIN is required include:

  • If your business entity is a C or S Corporation
  • If your business entity is a partnership
  • Certain LLCs require an EIN
  • If you pay wages
  • Are required to file employment, excise, fiduciary, or alcohol, tobacco, and firearms tax returns

The quickest and easiest way to obtain an EIN is online through the IRS’s website. The application is fairly simple and if approved, you will get your EIN immediately allowing you to use it conduct business. Importantly, all applications for a federal EIN must include the name of the person or entity which will be designated as the “responsible party” for the applicant entity. In most cases involving a small business, this will simply be the business owner.

California Payroll Tax Account Number Registration

Any business that has at least one employee and pays over $100 in wages in a quarter is subject to state payroll taxes. Importantly, employers of household workers, including domestic workers, also fall within these regulations. A person or a business entity can register for a Payroll Tax Account Number at the Employment Development Department’s website here.

Contact a California small business attorney today

Even if you have already registered for your EIN and California payroll tax account number, it is important to have your situation reviewed by an experienced attorney. Tax compliance issues are aggressively monitored by both state and federal authorities, and have the potential to put you out of business. Call our office today to schedule your consultation.


- Claire Kalia


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