A corporation tax ID is the tax identification number provided to a business entity that is registered as a corporation. There are two types of corporations.
- C-Corporation: Shareholders pay the taxes on a company’s profits
- S-Corporation: Typically has a level of double taxation
Both types of corporations allow shareholders to vote on business policies although the board of directors makes the final decisions. The percentage of taxes paid by any corporation depends on how much money it earned in profits. For example, a company that earns $50,000 or less in profits in a tax year will pay just 15 percent for taxes. A company that earns between $100,000 and $335,000 in profits will pay 39 percent in taxes. However, much larger corporations pay less in taxes than those making $335,000 in profits. A corporation earning more than $18,333,333 in profits pays just 35 percent in taxes.
The Importance of an Employer Identification Number
A federal tax ID number is important to your corporation for many reasons. If you intend to sell tobacco, firearms or alcohol, you will need a tax ID number. The number is also required if you want to hire employees, open a bank account under your company name or sign up for a business credit card. In addition, obtaining an employer identification number helps to present your business as a separate entity from yourself. This protects your personal finances by allowing you to keep your social security number more private as well as protecting your personal assets if your business ends up in financial trouble.
Applying for Your Tax Identification Number
Applying for your corporation tax ID number is as easy as answering a few questions on IRS-EIN-Tax-ID. The online application requests information about yourself and your company and helps you determine how the tax number will help your business. Once you submit your application, you can track it online. Most applicants receive their nine-digit number in a few business days. To learn more about the application process, contact IRS EIN Tax ID Filing Service.
