If you have a new business or just had it started its operation, you need to obtain a NC tax ID number. Note that in the state of North Carolina, you need two tax ID numbers to suit your needs for taxes.
In some cases, a small or big business may be asked by their customer about their federal employer tax identification number or FEIN. However, depending on their reason, a business has no need to disclose it. It may create a possibility of identity theft which can greatly affect your business. However, this question is unavoidable especially if you’re doing business with a lot of customers. Having said that, it is still important to find out why customers are requesting for such information.
What a Business Tax ID Number Is?
The federal employer tax identification number (FEIN) or tax ID number is a combination of nine digits issued to you by the IRS. It is given to various business establishments especially operating in the North Carolina area. This will determine the business and its employer/employee reporting. It has a similar role to the social security number; however, it is most appropriate for tax purposes. Some banks and financial institutions request for these numbers to open new accounts. However, if you obtain a NC tax ID number, there is difficulty in using it especially for sensitive information.
Is There a Need to Share Tax ID Number?
Going back to the question mentioned above, will this really concern the business if a customer asks for their FEIN? Good news is it cannot affect the business especially when it’s used for public information. These numbers are found in some search websites that focus on getting details about FEIN owners.
If the business is offering a service, the company may need FEIN to issue the form 1099-MISC for payments ranging from $600 and up. This form is necessary for payments made by the independent contractor for services costing $600 and more. If this was for a corporation, the 1099-MISC may not be necessary. However, it is still important to know why the customer needs your FEIN and how they plan to use it.