Does a small business need a Federal Tax ID number?

Whether or not a small business needs a federal tax ID number depends on the specifics of the business. If a business has employees, or if it operates as a partnership or corporation, then a federal tax ID number is required.

Other circumstances that would require a small business to have a federal tax ID number is if the business has a Keogh plan, if taxes are withheld on income other than wages paid to a non-resident alien, or if the business files tax returns on either alcohol, tobacco and firearms, employment or excise tax. Businesses that work with trusts, estates, nonprofits, trusts, farmers cooperatives or plan administrators can also be required to obtain a federal tax ID number.