Guide In Applying For Colorado Tax ID
Getting a Colorado Tax ID is necessary for people who are planning to launch a business or have started their business in the state recently. It is also required if one has taxable entity within the state of Colorado.
There are two kinds of ID that you will need to obtain. The first type is the Federal Tax ID which is also called as EIN and the second type is the State Level Tax ID.
Acquiring a Tax ID or EIN is the main responsibility of individuals planning to have business in Colorado, people acting as estate executor or administrator, someone who created a Trust and organizing a nonprofit organization. A Tax ID is also known for its other name EIN or Employer ID Number. It is composed of a unique set of number with nine digits. The IRS identifies the entity or business through their EIN when dealing with anything related to tax. The Tax ID is a requirement for getting a bank account for the business, when filing the tax returns of a business and more importantly when getting a business license.
During the planning phase of your business, it is recommended to apply for a Tax ID right away to prevent delays when getting the necessary licenses, opening a bank account and setting up the financing model.
Before applying, there a few things that must be taken into consideration:
- Know the structure of the organization or the business
- Know which party will shoulder the responsibility either the organization or a specific individual
- Know the physical address which will be used in applying for the Tax ID of the entity or business. If desired, a different mailing address can be used.
Aside from getting a Federal Tax ID or EIN, you have o get your Colorado Tax ID as well. This is the ID you will need in order to process payments for state income tax, sales tax and business tax. As a rule, the State Tax ID can be used for excise taxes on products like oil and gas, alcohol and tobacco among many others, sales and use tax, sales tax exemption permits and employee income tax withholding.