When selling services only - you usually do not need a Sales and Use tax ID number. However, if you plan to sell products, you will use the Sales & Use tax ID number to purchase products for re-sale - usually from a wholesaler - without having to pay sales tax. You then would sell these same products retail and collect your states sales tax from your customer. The sales tax you collect then gets remitted to the state of Maryland. It is not an expense to your business because you have to turn it over to the state. You should contact the Comptroller of Maryland at:
Additionally, if you have incorporated a business, you probably should get a Federal Employer Identification Number (FEIN). You state that you are the only employee. This sounds to me that you have an S Corporation. A shareholder of an S Corporation is considered an employee and needs to be put on payroll. You would use your FEIN number for all payroll tax reporting as well as year end tax filings. If you were an unincorporated entity - such as a sole proprietor - then you could get by with using your social security number rather then getting an EIN number. You can go to www.irs.gov and apply for an EIN number online.
If I can clarify anything for you, please let me know!
We`ve purchased supplies from a business that won`t tell us its EIN. The owner thinks that if we don`t have his EIN, we can`t report his income to the IRS and he can then dodge taxes. Is there a way to track down the EIN of a supplier who refuses to provide it? Is there a way to look up the supplier`s EIN online?
Unfortunately - I do not know of any way to look this up online. You can usually look up a companies corporate filings on their state`s Secretary of State web site online - if they are incorporated in their state or an LLC - but you will not find their EIN number listed in those document filings.
At year end, you would not be able to file a 1099 unless you had the EIN number or the owners social security number. You could go to www.IRS.gov and browse their site. They might have some information out there about how to handle this situation. Or you might want to call the IRS: 800-829-4933 and ask a representative there how you can handle this. You can usually ask questions anonymously if you prefer.
Thanks for responding so quickly! It is great to find a CPA who is so responsive!
I tried calling the IRS already, and whoever I spoke with said that they couldn`t give me the EIN, but it may be because I called the wrong department. I looked at the Texas Secretary of State`s office website and none of the forms that the supplier would have filled out have a blank for the EIN. I also looked at the Houston Texas city and Harris County web sites to see if there were any documents filed there, but I don`t really know how to find anything there.
I have heard that, in Houston, businesses are required to put a "UCC-1" document in the city or county records and that the EIN would be on that, but I don`t know how to find those. Would you know anything about that?
I had a few minutes and thought I would get right back to you. (sometimes my days are light!!)
The only thing I can think to do to find this UCC document would be to go to this site:
You would then go to: SOS Direct and search for the company there. (You could sign in by getting a "temporary login" if you did not want to get a permanent login.)
That is the best advice I can offer.
This post has gotten off track. VirtualCPA`s answer about Sales & Use Tax is correct - you need to check with your state and local agencies on this. Laws are different throughout the country, but typically you will need the license & have to collect or at least pay tax for the sale of goods, supplies, software, etc. Services are often, but not always, exempt from sales tax.
For startsmallbiz ... EIN`s are not widely available, and the IRS is not going to give it to you. You probably don`t need it anyway. To prevent the problem when you DO need one, request a W-9 before you write the check. 1099`s are typically required for services, rents, royalties, non-employee compensation - not for purchased goods. Example, you aren`t required to get an EIN from OfficeMax, and you don`t have to give them a 1099.
You`ve posted this question several times in different threads, and keep suggesting that your supplier is trying to evade taxes. I think you`re probably barking up the wrong tree due to a misinterpretation of when and why a customer needs a suppliers EIN.
A UCC-1 would have nothing to do with this. A UCC-1 is a financing statement used to perfect a security interest in collateral. For example, if you get a loan from your bank and use you inventory as collateral, the bank will probably file a UCC-1. Look one up at random at your Secretary of State`s website - they may have an EIN on it, but I doubt its required.
I mentor computer consulting business owners just like yourself on sales, marketing, and business development issues... all over the US, including many in Maryland.
One of the smartest investments that you can possibly make in the future of your business is to find a good, local (ideal, but not critical) CPA that you can lean on heavily as a trusted business advisor.
Don`t take important financial advice from well intentioned friends, family members, and colleagues. You`ve got to find and build a relationship with a Certified Public Accountant that you can use not only for preparing your personal and business tax returns, but all year long for ad hoc questions and advice.
Many times, the planning strategies that a good CPA suggests can pay for themselves many, many times over.
This is one area where you definitely don`t want to go cheap.
Joshua Feinberg, author
Computer Consulting Kit Home Study Course