Table of Contents

How To Get a Tax ID Number in New Jersey: A Comprehensive Guide

Securing a Tax ID Number, officially known as an Employer Identification Number (EIN), is a crucial step for businesses operating in New Jersey. It’s essentially your business’s Social Security Number, used to identify it to the IRS and the state for tax purposes.

The short answer: Obtaining an EIN in New Jersey involves applying directly with the Internal Revenue Service (IRS), as New Jersey itself does not issue federal tax IDs. This can be done online via the IRS website, by fax, or by mail. The online method is by far the quickest and easiest, often providing immediate approval. You’ll need to provide information about your business, including its legal structure, principal activity, and responsible party.

Let’s delve deeper into the process and address some frequently asked questions.

Understanding the EIN and Its Importance

Before we jump into the “how-to,” let’s clarify why you might need an EIN and what it signifies.

An EIN is a nine-digit number assigned by the IRS to identify business entities. You’ll likely need one if your business:

Employs people
Operates as a corporation or partnership
Files employment, excise, or alcohol, tobacco, and firearms taxes
Withholds taxes on income, other than wages, paid to a non-resident alien
Has a Keogh (or H.R. 10) retirement plan
Is involved with trusts, except certain grantor-owned revocable trusts, IRAs, and exempt organization business income tax returns.

Even if you don’t strictly need an EIN based on the above criteria, having one can simplify many business processes, such as opening a business bank account or applying for business licenses.

The Application Process: Step-by-Step

Now, let’s walk through the process of obtaining your EIN, focusing primarily on the online application:

Determine Your Eligibility: Make sure your business meets the requirements for obtaining an EIN. The IRS provides a comprehensive guide on its website.
Gather Required Information: Before you start the application, collect the following details:
- Legal Name of Your Business: This is the official name under which your business is registered (if applicable).
- Business Structure: Is it a sole proprietorship, partnership, corporation, LLC, or something else?
- Principal Business Activity: What does your business do? Be specific.
- Responsible Party Information: The responsible party is the person who controls, manages, or directs the entity and the disposition of its funds and assets. This includes their name, SSN, and address.
- Mailing and Physical Address of the Business: These can be the same or different.
Apply Online via the IRS Website:
- Go to the IRS EIN Assistant on the IRS website (irs.gov).
- Select the appropriate business structure.
- Follow the prompts carefully, answering all questions accurately.
- Double-check all information before submitting.
Receive Your EIN: If your application is successful, you will receive your EIN immediately online. You can download, save, and print your EIN confirmation notice (Form CP 575).

Alternative Application Methods

While the online method is the fastest, you can also apply for an EIN by fax or mail:

By Fax: Complete Form SS-4, Application for Employer Identification Number, and fax it to the appropriate IRS fax number based on your state. For New Jersey, consult the IRS website for the most up-to-date fax number. Expect a processing time of approximately four business days.
By Mail: Complete Form SS-4 and mail it to the IRS address listed on the form instructions. Expect a processing time of four to five weeks.

Important Note: Applying for an EIN is free. Be wary of third-party services that charge a fee to obtain an EIN for you. You can easily do it yourself directly through the IRS.

Common Mistakes to Avoid

Using an Incorrect Business Structure: Accurately identifying your business structure is crucial. If you’re unsure, consult with a legal professional.
Providing Inaccurate Information: Double-check all information before submitting your application. Errors can lead to delays or rejection.
Applying More Than Once: If you’re unsure if you already have an EIN, contact the IRS before submitting a new application.

Frequently Asked Questions (FAQs)

Here are some common questions regarding obtaining a Tax ID Number (EIN) in New Jersey:

1. Does New Jersey Issue Its Own State Tax ID Number?

No, New Jersey does not issue a separate state tax ID number for most businesses. You primarily need the federal EIN issued by the IRS. However, certain businesses, like those selling taxable goods or services, also need to register for a New Jersey Sales Tax Certificate of Authority.

2. What is a New Jersey Sales Tax Certificate of Authority, and How Do I Get One?

A New Jersey Sales Tax Certificate of Authority allows you to collect sales tax on taxable sales within the state. You can apply for one online through the New Jersey Division of Revenue and Enterprise Services (DORES) website. You’ll need your EIN to complete the application.

3. How Long Does It Take to Get an EIN Online?

Generally, if your application is complete and accurate, you will receive your EIN immediately online.

4. What Happens If I Make a Mistake on My EIN Application?

If you discover an error after receiving your EIN, contact the IRS Business & Specialty Tax Line to correct the information. You can find the contact number on the IRS website.

5. Can a Sole Proprietor Use Their Social Security Number Instead of an EIN?

Yes, a sole proprietor can use their Social Security Number (SSN) for business purposes. However, using an EIN can help protect your personal identity and streamline business operations, especially if you plan to hire employees or expand your business.

6. Is There a Fee to Obtain an EIN from the IRS?

No, applying for and receiving an EIN from the IRS is completely free. Beware of third-party websites that charge a fee for this service.

7. What If I Lose My EIN? How Do I Retrieve It?

You can request your EIN from the IRS by calling the Business & Specialty Tax Line. You will need to verify your identity and provide information about your business. Alternatively, if you’ve filed a previous tax return for your business, your EIN will be listed on that return.

8. Do I Need a New EIN If I Change My Business Name?

Generally, changing your business name alone does not require a new EIN. However, if you change your business structure (e.g., from a sole proprietorship to an LLC), you will likely need a new EIN. Contact the IRS for clarification in specific circumstances.

9. I’m an Out-of-State Business; Do I Need an EIN to Operate in New Jersey?

If you have a physical presence in New Jersey (e.g., an office, warehouse, or employees), you will likely need an EIN. Even if you don’t have a physical presence but are engaged in business within the state (e.g., selling goods or services to New Jersey residents), you may still need an EIN and a Sales Tax Certificate of Authority.

10. What Happens If I Don’t Get an EIN When I Need One?

Failing to obtain an EIN when required can result in penalties from the IRS. It can also create complications when filing taxes, opening bank accounts, and obtaining business licenses.

11. Can I Apply for an EIN Before I Officially Form My Business?

You generally need to have a legal business entity established before applying for an EIN. For example, if you’re forming an LLC, you’ll need to have filed the necessary paperwork with the New Jersey Division of Revenue and Enterprise Services.

12. Where Can I Find Form SS-4?

You can download Form SS-4, Application for Employer Identification Number, from the IRS website (irs.gov). Make sure you download the most recent version of the form.

Conclusion

Obtaining a Tax ID Number (EIN) is a straightforward process, particularly when applying online through the IRS website. By understanding the requirements, gathering the necessary information, and following the instructions carefully, you can secure your EIN quickly and efficiently, allowing you to operate your business legally and confidently in the Garden State. Remember, seeking professional advice from a tax advisor or attorney is always a good idea, especially if you have complex business circumstances.