Why you need a tax ID number

If you have your own business or work as an independent contractor, you may need to have a tax ID number. A tax ID number is like a Social Security number for your business, and it is something that may be required. 

If you have a business that sells products or has employees, your state more than likely will require you to have a tax ID number. This is required for a number of reasons. It helps keep track of whether or not you are paying required sales taxes, and it also helps the state track whether you are collecting and paying payroll taxes and other required taxes for any employees you have. Failing to get a tax ID when you are required to have one can lead to serious financial penalties and even jail time if it's determined that you deliberately failed to get a tax ID and attempted to defraud the government. 

If you work as a sole proprietor and mostly offer services rather than selling products, you may not be required to have a tax ID number and can simply use your Social Security number just as other people do to file individual income taxes. However, if you want to set up a separate business to offer liability protection, then you will need to have a tax ID number, even if the business just includes you. You cannot set up a limited liability company or any other sort of business without a tax ID number. Though it will require additional work and some additional cost, getting a tax ID number and setting up a business can be advantageous for a sole proprietor, because it can allow you to keep your business and personal finances separate, which can lessen your liability if you are sued or face a regulatory action. You may apply for nc tax id for your own good.