How To Get An EIN (Tax ID) Number In Iowa
Starting a business in Iowa is an exciting process. You get to build an enterprise that fills a useful niche in your community or the world, and you enjoy a sense of meaning and accomplishment along the way. However, there’s also a lot of paperwork involved in the process, and to complete tax forms and bank applications, you will need an Iowa EIN number and an Iowa tax ID number.
You use the EIN on federal tax forms and bank paperwork, and you use the Iowa tax ID on state tax forms or other state-related documents. To help you out, this guide explains how to get an EIN number in Iowa. Then, it outlines the differences between the state and federal numbers.
How To Apply For A Tax ID Number In Iowa
When applying for an EIN number Iowa business owners have a few options. They can apply on their own, work with a service, or hire an accountant. Wondering if you even need this tax ID number? Here are the main reasons to obtain an Iowa EIN number:
● If you’re hiring an employee — You need the number for payroll tax returns.
● If you have to withhold taxes from a contractor — In some cases such as when you don’t have a valid W9, you may need to withhold 24% from contractor pay.
● If you want to open a bank account or apply for a loan in the business’s name — Banks use EINs to identify business clients.
● If you’re buying an existing business — EINs don’t transfer to new owners.
● If you’re establishing a partnership or an S-corp — You need an EIN whether you’re establishing a new entity or converting a sole proprietorship into one of these entities.
It’s not just businesses that need EINs. Nonprofits, estates, trusts, and some retirement plans as well as other organizations may need an EIN. Once you establish that you need the number, here is how to apply.
Prepare The Required Information
To complete the EIN application, you need basic information about your business including name, contact details, and industry. You also need the following:
● Responsible party — This is not just a contact person. It must be someone who controls, manages, and disperses funds.
● Highest number of employees in the next 12 months — You won’t be penalized if your number of employees changes, but you should try to make as accurate of an estimate as possible.
● If you want to File Form 944 annually instead of Form 941 quarterly — You can only do so if you pay less than $1,000 in payroll tax for the year, which equates to about $5,000 in wages.
Once you have this information, you’re ready to apply for a federal tax ID number. Here are the application methods.
To apply for an EIN number Iowa business owners just need to gather the above information. Then, they can apply online, and they should get the number on the same business day. This is the fastest and most secure option.
Submit Your Application Via Mail
Alternatively, you can apply for an EIN through the mail. You need a paper copy of Form SS-4, and if you have someone else fill out the form, you may need a power of attorney document. If you mail the application, expect to get your number in six to eight weeks.
Frequently Asked Questions
Still, have questions about the Iowa EIN number? Ready to learn more? Then, keep reading. We’ve corralled answers to the most common questions we hear about this process.
An EIN is a federal tax ID number. There are also state tax ID numbers. Almost all businesses need a federal and a state tax ID number. The only exception is for sole proprietors that don’t have employees, sell taxable products, or want business bank accounts.
No. The Iowa Secretary of State processes a range of business formation activities such as registering an LLC, but they do not issue EIN numbers. To get an EIN number Iowa residents need to reach out to the federal government.
An EIN is a tax ID number from the federal revenue agency. An Iowa tax ID number is from the Iowa Secretary of State. These numbers fill similar functions, but one is for federal taxes and the other is for state taxes.