Any business that operates in Texas needs a state tax ID number in addition to licenses and permits. This unique identifier is necessary for filing tax returns, handling employee payroll and obtaining business loans. Entrepreneurs can apply online for a tax ID in Texas or obtain it through the state agencies with which they are doing business.
TL;DR (Too Long; Didn't Read)
If you're doing business with a state agency in Texas, fill out the AP-152 form to receive your tax ID number. Another option is to apply for a business permit, such as a sales tax permit. Your tax identification number will be issued once your application is processed.
Why Get a State ID?
Whether you operate as a sole proprietor, a partnership or a limited liability company, it's necessary to pay federal taxes. To do so, you must register with the IRS and obtain a federal tax ID, or employer identification number. Once this step is completed, you may open a bank account, apply for business licenses, hire employees and so on.
Entrepreneurs are legally required to obtain an EIN immediately after registering their business (assuming they're not a one-man business). They also need to apply for a state tax ID number, such as a Texas taxpayer number. Tax obligations vary among states, which is why it's important to get a state ID where your business is located.
The Texas taxpayer number, or TIN, has 11 digits, while the EIN has nine digits. The former is assigned by the state's comptroller and serves the same purpose as the federal tax ID number. Your EIN, on the other hand, will be assigned by the IRS. As an entrepreneur, you need both state tax ID and federal tax ID numbers to run your business, file tax returns, pay wages, get a tax-deferred pension plan, open investment accounts and apply for business licenses.
Application for a Tax ID in Texas
There are several ways to get a tax ID in Texas. If you're doing business with the state, the government agency in question will provide you with the AP-152 form. Be prepared to submit your Social Security number, EIN or individual taxpayer identification number, also known as an ITIN. Fill out and print the form and then submit it to the state agency with which you're doing business.
A state agency representative can complete the form on your behalf, as your signature is not required. Nonresident aliens and businesses located outside the U.S. may not have an SSN, ITIN or EIN. In this case, the agency may request a comptroller-assigned TIN for your business.
Complete the AP-201 Form
Business owners can also obtain a tax ID in Texas when they register for a sales tax permit or other permits. This unique identifier is used for paying sales and use tax, excise taxes and more. The sales and use tax, for example, is required for all individuals and businesses that sell or lease tangible personal property or taxable services in the state. Remote sellers and businesses that sell, lease or rent taxable products in Texas or collect tax on certain services and goods need this permit too.
Applying for a sales tax permit is free of charge. Access Comptroller.Texas.gov, select "Taxes", click "Texas Sales and Use Tax Forms" and then fill out the form AP-201. You will be required to provide the following information:
- Business organization type
- Legal business name
- Federal employer identification number
- Social Security number (for sole proprietors)
- Texas identification number (TIN)
- NCAIS (North American industrial classification system) code
- All general partners, officers or managing members and their legal information
- Place of business
- Contact details
If you don't have a Texas identification number, you will receive one as soon as your application is processed. Submit the AP-201 form online or mail it to the Comptroller of Public Accounts, and you should receive your permit within four weeks. In case you need help with your application, call 800-252-5555 or submit your question online via Comptroller.Texas.gov. Another option is to apply for a sales tax permit (and thus get a tax ID number) in person at a local field office.
- U.S. Small Business Administration: Get Federal and State Tax ID Numbers
- Texas Comptroller of Public Accounts: Texas Online Tax Registration Application
- Texas Comptroller of Public Accounts: Texas Identification Number
- Texas Comptroller of Public Accounts: Comptroller-Assigned Payee Numbers
- IRS: Apply for an Employer Identification Number (EIN) Online
- Investopedia: Tax Identification Number (TIN)
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