Business Tax Registration: What You Need to Register For

What Is Business Tax Registration?

Business tax registration is the process of registering your business with the government agencies responsible for the taxes that apply to your business.

Depending on your business, tax registration may involve federal, state, and local governments.

Your requirements can depend on:

• Business structure
• Business location
• Products or services
• Whether you have employees
• Whether you sell taxable goods or services
• Whether you operate in multiple states
• Whether you have specific industry tax obligations

Business tax registration is different from forming an LLC or obtaining a business license.

A business may need to complete several separate registrations before it is fully set up to handle its tax obligations.

Does Every Business Need Tax Registration?

Not every business needs the same tax registrations.

The requirements depend on the business and the taxes that apply to it.

For example, a business may need:

• A federal EIN
• State income tax registration
• State employer tax registration
• Sales tax registration
• Local tax registration
• Excise tax registration
• Other industry-specific tax accounts

The IRS explains that the form of business you operate affects the taxes you may have to pay and how those taxes are reported.

State and local requirements can vary based on your location and business structure.

The important question isn't simply:

"Do I need a business tax ID?"

It's:

"Which taxes apply to my business, and where do I need to register?"

If you're just starting your business, see:

→ How to Get an EIN

Business Registration vs. Tax Registration

These are two different steps.

Business Registration

Business registration generally establishes your business or legal entity with the appropriate government agency.

For example, forming an LLC with your state creates the LLC.

Tax Registration

Tax registration establishes your business with the government agencies responsible for collecting or administering specific taxes.

For example, you may need to register separately for:

• State sales tax
• State employer taxes
• State income or franchise taxes
• Local taxes
• Other applicable taxes

Think of it this way:

Business registration = establishes the business

Tax registration = establishes the business's tax accounts and obligations

Completing one does not automatically complete the other.

Federal Tax Registration

Federal tax registration primarily involves the Internal Revenue Service (IRS) and, depending on your business, other federal agencies.

One of the most common federal registrations is an Employer Identification Number, or EIN.

An EIN is the federal tax identification number used to identify a business for federal tax purposes.

The IRS says an EIN may be required for businesses such as corporations and partnerships, businesses with employees, and businesses subject to certain employment, excise, or other federal tax requirements.

The IRS provides EIN applications through IRS.gov at no charge.

If you haven't obtained yours yet, see:

→ How to Get an EIN

State Tax Registration

Your business may also need to register with one or more state tax agencies.

State requirements vary.

Depending on the state and your business, registration may involve:

• State income taxes
• Franchise taxes
• Employer taxes
• Unemployment taxes
• Sales taxes
• Withholding taxes
• Other state-specific taxes

The SBA notes that state tax obligations vary by location and business structure and recommends checking with the appropriate state tax authority.

The state tax agency may be called something like:

• Department of Revenue
• Tax Commission
• Department of Taxation
• Department of Revenue Services
• Comptroller
• Department of Finance

The name varies by state.

Local Tax Registration

Some businesses may also have local tax obligations.

Depending on where you operate, local taxes may be administered by:

• City
• County
• Municipality
• Special taxing district
• Other local government

Local requirements can vary significantly.

Your business location can affect which taxes apply and where you need to register.

This is one reason business owners should evaluate their tax obligations beyond simply registering their LLC with the state.

Sales Tax Registration

If your business sells taxable products or services, you may need to register for sales tax.

This is generally a separate registration from your general business tax registration.

You may need to determine:

• Whether your products are taxable
• Whether your services are taxable
• Where you have sales tax obligations
• Whether you have physical presence
• Whether you meet an economic nexus threshold
• Whether marketplace rules apply

Once registered, you may have ongoing obligations to:

• Collect sales tax
• File sales tax returns
• Remit sales tax
• Maintain records
• Track changes in your obligations

For more information, see:

→ How to Get a Sales Tax Permit

Employer Tax Registration

Hiring employees can create additional tax registration requirements.

Employers may have responsibilities involving:

• Federal income tax withholding
• Social Security and Medicare taxes
• Federal unemployment taxes
• State income tax withholding
• State unemployment taxes
• Other state or local employer taxes

The IRS notes that employers are responsible for several federal employment taxes, including federal income tax withholding, Social Security and Medicare taxes, and FUTA taxes.

State employer requirements vary by location.

Hiring your first employee should therefore trigger a review of your federal, state, and local tax registrations.

Excise Tax Registration

Some businesses may have additional federal excise tax obligations.

Excise taxes can apply to certain products, activities, industries, or transactions.

The IRS identifies excise taxes as one of the general categories of federal business taxes.

Not every business needs to register for excise taxes.

If your business operates in an industry subject to federal excise tax requirements, determine which registrations and filings apply.

Do LLCs Need Business Tax Registration?

An LLC may need multiple tax registrations.

Forming an LLC does not automatically register the company for every tax that might apply.

An LLC may need:

• An EIN
• State tax registration
• Sales tax registration
• Employer tax registration
• Other applicable tax accounts

The exact requirements depend on the LLC's activities, structure, location, and tax classification.

For example, an LLC with no employees and an LLC with 25 employees can have very different tax registration requirements.

Do Sole Proprietors Need Tax Registration?

Sole proprietors may also have tax registration requirements.

A sole proprietor generally reports business income through their individual federal tax return, but that doesn't mean there are no other tax obligations.

Depending on the business, a sole proprietor may need:

• An EIN
• Sales tax registration
• State tax registration
• Employer tax registration
• Local tax registration
• Other applicable registrations

The IRS explains that self-employed individuals generally have income tax and self-employment tax responsibilities, including estimated tax payments in appropriate circumstances.

Step 1: Identify Your Business Structure

Before determining your tax registrations, identify how your business is structured.

Common structures include:

• Sole proprietorship
• Partnership
• LLC
• Corporation
• S corporation tax election
• Nonprofit corporation

Your structure can affect how your business is taxed and which returns or registrations apply.

The IRS states that the form of business you operate determines what taxes you must pay and how you pay them.

If you're still deciding how to structure your business, see:

→ LLC vs. Corporation

Step 2: Identify Your Federal Tax Requirements

Next, determine which federal tax requirements apply.

Depending on your business, these can include:

• Income tax
• Self-employment tax
• Employment taxes
• Excise taxes
• Information reporting

The IRS identifies income, estimated, self-employment, employment, and excise taxes as major categories of federal business taxes.

You may also need an EIN depending on your business structure and activities.

Step 3: Determine Your State Tax Obligations

Next, determine which state taxes apply.

Consider:

• Where your business is registered
• Where you physically operate
• Where employees work
• Where you sell products or services
• Whether you have taxable sales
• Whether the state imposes income or franchise taxes
• Whether you have employer tax obligations

The SBA recommends checking the relevant state tax authority because state tax laws vary by location and business structure.

Step 4: Determine Whether You Need Sales Tax Registration

If you sell products or services, determine whether sales tax applies.

Ask:

• Are my products taxable?
• Are my services taxable?
• Which states tax what I sell?
• Do I have physical presence?
• Do I meet an economic nexus threshold?
• Do marketplace rules affect my sales?

If registration is required, complete the appropriate sales tax registration before collecting sales tax as required by the applicable state.

See:

→ How to Get a Sales Tax Permit

Step 5: Determine Whether You Have Employees

Employees can create additional tax obligations.

If you hire employees, review:

• Federal employment taxes
• State withholding
• State unemployment taxes
• Local employer requirements
• Payroll reporting
• New-hire reporting

Your state may require separate employer tax registrations.

Don't wait until your first payroll is processed to determine what registrations are required.

Step 6: Register With the Appropriate Tax Agencies

Once you've identified the taxes that apply, register with the appropriate agencies.

Depending on your circumstances, this could include:

• IRS
• State tax authority
• State employment agency
• Local tax authority
• Other specialized government agency

Some registrations can be completed online.

Others may use separate applications or registration systems.

Keep confirmation numbers and registration documents with your business records.

Step 7: Set Up Your Tax Accounts

After registration, organize your tax accounts.

Record:

• Agency
• Account number
• Tax type
• Registration date
• Filing frequency
• Payment frequency
• Filing deadlines
• Renewal requirements
• Login information

Keeping these details organized can make recurring compliance much easier.

Step 8: Determine Your Filing Schedule

Registration is only the beginning.

Different tax accounts can have different filing schedules.

You may have:

• Monthly filings
• Quarterly filings
• Annual filings
• Event-based filings
• Payroll-related filings

The IRS provides a tax calendar for businesses, while state and local agencies establish their own deadlines.

Make sure each deadline is tracked separately.

Step 9: Set Up Tax Recordkeeping

Good records are an important part of tax compliance.

Depending on your business, records may include:

• Sales records
• Expense records
• Payroll records
• Tax returns
• Tax payments
• Sales tax collected
• Exemption documentation
• Contractor payments
• Business asset records
• Tax registration confirmations

The IRS includes recordkeeping as a basic part of starting and operating a business.

Step 10: Review Your Tax Registrations as Your Business Changes

Your tax obligations can change as your business grows.

Review your registrations when you:

• Hire employees
• Move locations
• Open another location
• Expand into another state
• Begin selling new products
• Add new services
• Change your business structure
• Change your tax classification
• Reach a sales tax threshold
• Close the business

A tax registration that was correct when you started may not be sufficient after your business changes.

Start Tracking Your Business Compliance →

Startup to Corporate helps business owners organize tax registrations, licenses, filings, renewals, and other business requirements so they can see what needs to be handled and when.

Business Tax Registration vs. EIN

These terms are sometimes confused.

An EIN is a federal tax identification number.

Business tax registration is the broader process of registering for the specific taxes that apply to your business.

For example, your business might have:

EIN

plus

State sales tax registration

plus

State employer tax registration

plus

Other applicable tax accounts

Getting an EIN doesn't automatically complete every state or local tax registration.

Business Tax Registration vs. Business License

These are also different.

Business License

Generally relates to authorization to operate a business or conduct certain activities.

Business Tax Registration

Relates to establishing the business with the appropriate tax authorities for taxes that apply.

You may need both.

For example:

LLC formation

↓

Business license

↓

Sales tax registration

↓

Employer tax registration

Each serves a different purpose.

What Happens If I Don't Register for Required Taxes?

Failing to register when required can create compliance problems.

Depending on the tax and jurisdiction, consequences can include:

• Penalties
• Interest
• Back taxes
• Late filings
• Enforcement actions
• Difficulty obtaining or maintaining other registrations

The specific consequences depend on the applicable tax and government agency.

If you discover that you should have registered earlier, determine what the applicable agency requires rather than simply ignoring the issue.

Business Tax Registration Checklist

Before considering your business tax setup complete, consider whether you've evaluated:

• Business structure
• EIN requirements
• Federal tax requirements
• State tax requirements
• Local tax requirements
• Sales tax requirements
• Employer tax requirements
• Withholding requirements
• Unemployment tax requirements
• Excise tax requirements
• Economic nexus
• Tax registration accounts
• Filing frequencies
• Payment deadlines
• Recordkeeping requirements
• Tax account changes
• Renewal or cancellation requirements

Your exact checklist will depend on your business activities, structure, employees, and locations.

Common Business Tax Registration Mistakes

Mistake #1: Assuming an EIN is all you need

An EIN is important, but it doesn't automatically complete state and local tax registrations.

Mistake #2: Assuming LLC formation handles tax registration

Forming an LLC and registering for applicable taxes are generally separate steps.

Mistake #3: Forgetting sales tax

Businesses selling taxable products or services should evaluate sales tax obligations separately.

Mistake #4: Waiting until you hire employees

Employees can create additional tax registration and payroll requirements.

Mistake #5: Ignoring state taxes

Federal tax registration doesn't automatically satisfy state tax obligations.

Mistake #6: Forgetting local taxes

Some businesses can have local tax obligations in addition to federal and state requirements.

Mistake #7: Failing to update registrations

Moving, expanding, hiring, or changing business activities can affect your tax obligations.

Mistake #8: Missing recurring deadlines

Tax registration creates ongoing responsibilities.

Know when each return and payment is due.

Business Tax Registration and Ongoing Compliance

Registering for the taxes that apply to your business is only the beginning.

Depending on your business, you may need to track:

• Federal tax filings
• State tax filings
• Local tax filings
• Sales tax returns
• Payroll tax filings
• Tax payments
• Annual reports
• Business licenses
• Permits
• Registered-agent requirements
• Other government filings

Some requirements happen once.

Others happen monthly, quarterly, or annually.

Others are triggered when your business changes.

Stay on Top of Your Business Requirements →

Startup to Corporate helps business owners organize registrations, licenses, filings, deadlines, renewals, and other compliance requirements so they can see what needs to be handled and when.

The Bottom Line

Business tax registration isn't one single registration.

It's a collection of federal, state, and potentially local registrations and accounts based on the taxes that apply to your business.

A typical process looks like:

Choose your business structure

↓

Get an EIN if required

↓

Identify federal tax obligations

↓

Identify state tax obligations

↓

Determine sales tax requirements

↓

Determine employer tax requirements

↓

Check local tax requirements

↓

Register with the appropriate agencies

↓

Track filing and payment deadlines

And remember:

Tax registration is only the beginning of tax compliance.

Once your accounts are established, you'll need to keep up with the filings, payments, records, and other requirements associated with them.

As your business grows or changes, your tax obligations can change too.

Get Your Business Organized →

Startup to Corporate helps business owners keep track of registrations, licenses, filings, deadlines, renewals, and other compliance requirements in one place.

Know what your business needs. Know when it needs to be done.