If you have employees, you have responsibilities—one of which is to obtain a Federal Employer Identification Number (FEIN). But, that’s not the only identifying number you need. More than likely, you also need a state tax ID number.
So, what is a state ID number, and how can you obtain it? Read on for the scoop. But first, let’s review FEIN.
FEIN review
Your federal EIN is a type of taxpayer identification number from the IRS. It is a unique, nine-digit number that identifies your business. Businesses use the EIN to file employment tax forms (e.g., Form 941) and business tax returns.
You must apply for an EIN if you:
- Have employees
- Structure your business as a corporation or partnership
- File certain tax returns (e.g., excise tax)
- Withhold taxes on income, other than wages, for non-resident aliens
- Have a Keogh plan
- Are involved with qualifying trusts, estates, real estate mortgage investment conduits, nonprofit organizations, farmers’ cooperatives, or plan administrators
After you receive your federal EIN, use the number to identify your business on the tax forms you file with the IRS. However, your federal EIN doesn’t cover your state responsibilities. Generally, your state also requires you to have a special identification number for state tax reporting.
What is a state tax ID?
A state identification number is an EIN that businesses use for state income tax reporting. The state tax ID is also called a state EIN, state employer ID, or state tax registration. You need a state tax ID number if your business must file state taxes. Most states require you to have a unique state tax ID number in addition to your federal EIN.
Apply for a state tax ID if you:
- Plan on hiring employees
- Sell goods or services
- Want to protect your sole proprietorship against identity theft
Generally, you should have your state tax ID number before you fill out state tax forms, register your business in the state, or apply for business licenses and permits.
After applying, the state assigns a unique alphanumeric number that you can use on state income tax filings. This alphanumeric ID is only valid for this state. If you have employees or file taxes in other states, you need multiple state tax IDs (one for each state).
Although the federal EIN is nine digits long, state ID number formats vary. For example, Georgia’s state tax ID number is also nine digits long, but it uses a mix of numbers and alphanumeric characters (e.g., 1234567@@, where the @@ is replaced with an alphanumeric character).
Keep in mind that a state tax ID number for income taxes isn’t the only state ID number you might need. Generally, you need two unique state tax ID numbers (per state)—one for reporting state income taxes and one for reporting state unemployment insurance. A state unemployment tax ID number is a separate number employers use to report state unemployment taxes.
Which states don’t require a state EIN for income taxes?
Again, most—but not all—states require employers to have a state EIN for income taxes. However, nine states do not impose a state income tax.
The following states do not impose state income taxes on employee wages:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
You do not need an EIN for state income tax in the above states. However, you must still apply for a state unemployment tax account number.
How to apply for a state identification number
How you apply for a state tax ID number varies by state. But, the basic process is generally the same.
To apply for a state ID number, you need to:
- Set up your business
- Set up your federal EIN
- Apply for your state ID number(s)
- Register for a state tax ID for income purposes, generally with your state’s department of revenue
- Register for a state unemployment tax ID number, generally with your state’s department of labor
| Not sure where to go to apply for a state tax ID number? Patriot’s New Employer Information by State page has you covered. |
What to do if you lose your state ID number
Already have a state ID number but not sure what it is … or where to find it? No worries. You can find your state tax ID number by:
- Logging into your online account
- Looking at documents such as Forms W-2 and state unemployment tax forms
- Reviewing letters from the state
- Contacting your state
Want to make payroll tax filing easier? Sign up for Patriot’s Full Service payroll services, and we’ll keep you up-to-date on your state payroll tax filing obligations. And, get a free, no-obligation trial!
This is not intended as legal advice; for more information, please click here.
