Business & farm

Hello again, Goodenow, and thank you for your follow up questions!

You asked  "Does it make a difference on the amount of taxes owed if I use my EIN or SSN? My question refers to any tax, federal or state. For example, if I do work under my EIN, don't I then owe state sales tax for the money earned? Whereas if I did the work under my SSN, I wouldn't owe that sales tax?"

For federal taxes, both individuals and businesses can use their SSN as their taxpayer identification number(TIN),  when filing tax returns. However, if you have an EIN because you have a registered business entity (such as a sole proprietorship, partnership, LLC, or corporation), you should use that EIN for tax purposes instead of your SSN.

For state taxes, the rules vary depending on the state. Some states require businesses to register for a sales tax permit and collect sales tax on goods or services sold, while others do not. In general, if you are selling goods or services in a state where you have a physical presence (such as an office or store), you are required to collect sales tax on those sales. Using an EIN or SSN does not affect this requirement.

Overall, using your EIN or SSN may not directly impact the amount of taxes owed, but it is important to use the correct TIN for your business entity and comply with all tax laws and regulations in your state.

More information about Sales Tax:

o determine how to charge and remit taxes for a small business, consider the following:

• When should sales tax be charged? Sales tax is required in 45 states and various localities, with exemptions available depending on factors such as point of sale and product type. Verify whether your state or locality requires a license to sell or a sales tax permit, and charge the appropriate local rate along with any applicable state and specialty rates for your specific location.
• Do you have Nexus? Sales tax nexus refers to the connection between a seller and a state, with thresholds that trigger obligation when certain factors occur. Understand your business's nexus obligations before growth occurs by determining if nexus exists in states where you do business. Nexus requirements vary by state and consider physical presence, economic nexus, transaction thresholds, and other relevant business activities.
• Is the product or service taxable? Product taxability can vary based on the jurisdiction and the nature of the product being sold. Consider if your state collects sales tax based on origin or destination, if you're selling a product or service, and if the product or service is required to be taxed.
• Does an LLC have to pay sales tax? Yes, an LLC must collect sales tax for their products or tangible personal property sold in jurisdictions where they operate. Consider all factors mentioned above when determining if sales tax applies, regardless of business type.

Small business owners must understand how and when to charge sales tax, as well as how to remit it to state or local government.

1. To start, determine if your business has a compliance obligation in your state and register with the appropriate taxing agency before collecting sales tax.
2. Document the sales tax collected on invoices and file them with the relevant tax jurisdiction, based on the state's sales tax due date and filing frequency.
3. Research your state's filing frequency and due dates , as this varies from state to state.
4. To file your sales tax return, the first step is to gather the forms you need from the revenue department for the state in which you're filing (you can often find and complete these forms online). Fill out those forms with the numbers from your sales, and make sure you submit before your due date.

For additional information on related topics, please check out the links below:

Single Member Limited Liability Companies (SMLLC) 

Recordkeeping  

Small business tax workshops, meetings and seminars 

Limited Liability Company Taxes  

LLC Tax Filing Rules 

Hopefully this information helps! Please feel free to reach backout with any additional questions or concerns you might have!

Have an amazing rest of your day!

Terri Lynn, EA

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