What is the difference between EIN and State ID Number?
Most frequently asked question by our callers is the difference between Employer Identification Number (EIN) and State Identification Number or also known as (Sales Tax Number).
- EIN assign by Internal Revenue Service State ID Number Assign by the state EIN is used to hire employees State ID Number is used to collect sales tax from your clients and to avoid sales tax to your supplier.
- EIN is used to file business taxes State ID Number is used to file Sales Taxes
- EIN can be requested to IRS to cancel State ID can we cancelled by filing final sales tax return State ID Number is also known as Sales Tax permit, Certificate of Authority, Reseller Permit, Sales and Use Tax Number.
- Excise business Tax and Taxpayer ID Number
- Employer Identification Number also known as Federal Employer Identification Number (FEIN).
Sales tax id number or sales tax exemption certificate is a legal document issued by the state. This certificate of authority gives your business the authority to collect the required sales and use taxes, and to issue appropriate sales tax exemption documents, including resale certificates used for purchasing inventory.
Other names: Sales tax id number also known as
* Reseller permit
* Sales tax vendor id number
* Sales tax registration
* Reseller tax id
* Sales tax permit
* Reseller certificate and
* Sales tax exemption certificate
* Certificate of authority
* Sales tax ID number
* State tax ID number
A sales tax or a retail sale is a tax on the end-purchase of a good and provision of services including internet sales. Normally sales tax is levied on 'tangible personal property'; it has to be movable. Intangible property (e.g. stocks and bonds) are excluded.
Sales taxes can be applied to tangible goods like food (in some states), clothing, cars, furniture, household items, and other goods. By comparison, the sales tax does not generally apply to landscaping services, attorney fees, private school tuition, stocks and bonds, real estate investments, and other purchases more typically made by higher-income families.
A seller has to charge sales tax if it has 'nexus' where it is located. Nexus, or physical presence, is established if a business maintains a temporary or permanent presence of people (employees, service people or independent sales/service agents) or property (inventory, offices, warehouses) in a given locality. There is no over-arching definition of nexus, so each taxing locality may define it differently - and many do, leading to endless problems for businesses which have operations in multiple states.
“Bottom Line Employer identification Number and State Identification Number are two separate documents assigned by the federal and state respectively”