Tax Identification Numbers
Taxes are inevitable in business, and many startups will need one or more tax identification numbers, including:
- A federal employer identification number
- A Minnesota taxpayer identification number
- A Minnesota unemployment insurance employer account number
New tax identification numbers must be obtained each time the ownership or form of business organization changes.
Federal Employer Identification Number
Sole proprietors who do not have employees, who are not required to file information returns, who do not have a retirement plan for themselves, and who are not required to pay federal excise taxes in connection with their business generally may use their social security number as their federal employer identification number (also known as Federal Tax Identification Number (FTIN)). Single-member limited liability companies that have elected to be taxed as a sole proprietorship may follow that rule, too.
All other business entities are required to obtain a federal employer identification number by filing Form SS-4 with the Internal Revenue Service. Note also that an independent contractor doing commercial or residential building construction or improvements in the public or private sector is considered to be, for workers’ compensation purposes, an employee of any person or entity for whom or which that independent contractor performs services unless, among other things, that independent contractor has a federal employer identification number.
Form SS-4 may be obtained from the Internal Revenue Service by calling the IRS at the telephone number listed in the Resource Directory section of this Guide. The form and instructions can also be printed directly from the IRS website at Forms and Publications.
You can apply for the federal employer identification number online, by fax or by U.S. mail. To complete the application and receive the number for immediate use using the IRS website, go to How to Apply for an Employer Identification Number (EIN).
Minnesota businesses seeking to apply via fax can submit their application by dialing 859-669-5760. Mail applications, which can take up to 4 to 5 weeks, should be submitted—for Minnesota businesses—to IRS, EIN Operation, Cincinnati, OH 45999. Fax-TIN: 855-641-6935.
Minnesota Taxpayer Identification Number
A business needs to obtain a Minnesota tax identification number (a seven digit number assigned by the Department of Revenue) if it is required to file information returns for income tax purposes, has employees, makes taxable sales, or owes use tax on its purchases. Most businesses need a Minnesota tax identification number. However, a sole proprietorship or single member limited liability company which does not have any of these tax obligations does not need a Minnesota tax identification number. See the Department of Revenue website, What is a Minnesota Tax ID Number? and Do I Need to Register?
To obtain a Minnesota Tax Identification number, visit the Minnesota Department of Revenue website at Register Online or Business Center for alternative registration methods. You will need your federal employer ID number (FEIN), if applicable; the legal name or sole proprietor name and business address; the business name (Certificate of Assumed Name) if applicable; NAICS (North American Industry Classification Code) code available from the U.S. Census Bureau’s website; names and social security numbers of the sole proprietor, officers, partners or representatives; and address and name of a contact person. If you do not have Internet access, call 651-282-5225 or 800-657-3605 to speak to a business registration representative.
If you already have a Minnesota ID number, you may need to apply for a new one if the business changes its legal organization, or you are required to apply for a new federal ID number.
Minnesota Unemployment Insurance Employer Account Number
All business entities, other than sole proprietorships, single member limited liability companies, partnerships without employees or corporations and limited liability companies with no employees other than owner/officers with 25 percent or more ownership share, must register with the Department of Employment and Economic Development, Unemployment Insurance (UI) Program.
The Unemployment Insurance (UI) Program issues identification numbers that are different from those issued by the Department of Revenue and the Internal Revenue Service. Go to Register online. Employers may contact the Unemployment Insurance (UI) Program at 651) 296-6141, option 4. The UI Program requests that businesses not register for a UI Employer account number until wages have actually been paid.
What's the Difference?
Many entrepreneurs wonder how a Minnesota tax ID, a Minnesota sales tax permit and a Minnesota employer ID differ.
Minnesota does not have a separate sales tax permit or employer ID number.
If a business has a Minnesota Tax ID and is registered to collect sales tax (this registration is part of the application for a Minnesota Tax ID, Form ABR, Application for Business Registration), the Minnesota Department of Revenue will send a confirmation letter that will serve as a sales tax permit. It is not required that this letter be displayed, but suppliers may require a copy for their records. You can print a copy of your registration.
The Minnesota Tax ID number is called other things, such as “sales tax exempt number”, “resale exemption number”, or “seller’s permit”. This is merely a difference in terminology, often encountered in dealing with suppliers from other states. If a business has a Minnesota Tax ID, and is registered for the tax types that it needs to collect and submit, then it does not need to apply for any additional numbers from the Minnesota Department of Revenue.
If a business is registered to collect income tax withholding, the Minnesota Tax ID also serves as its Minnesota Employer ID for tax purposes. However, businesses may also be required to register with the Department of Employment and Economic Development for an Unemployment Insurance (UI) Employer Account Number for unemployment taxes. See more.
Consultants at our Small Business Assistance Office can help you understand more about the basics of business taxation. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide.
Our Guide to Starting a Business in Minnesota provides a detailed look at this and other important issues.