When you ask, "how much does a tax id cost?", the most direct answer is a relief for any entrepreneur: obtaining a federal Employer Identification Number (EIN) directly from the IRS is absolutely free. This nine-digit number acts like a Social Security Number for your business, and you'll need it for essential tasks like hiring employees, opening a business bank account, and filing federal tax returns.
However, the complete story on cost isn't quite that simple. While the federal EIN application is free, you might encounter fees for state-level tax IDs, such as sales tax permits. Additionally, many third-party services offer to handle the application process for you for a fee. This guide will explain every potential cost, helping you understand what is truly free and where you might need to budget for expenses.
Understanding the Cost of a Federal Tax ID Number (EIN)#
Let's be perfectly clear: obtaining a federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is free. The government wants to make it as easy as possible for businesses to become compliant, so they do not charge for this foundational step. An EIN is crucial for establishing your business as a distinct legal entity.
Is There an EIN Application Fee?#
No, there is no direct EIN application fee from the IRS. The official Form SS-4, used to apply for an EIN, can be submitted online, by mail, or by fax without any charge. If you encounter a website asking for payment to get a federal EIN, it is a third-party service, not the U.S. government.
How to Apply for a Free Federal Tax ID Number#
The simplest and fastest way to get your free EIN is through the official IRS website. The online application is an interactive session that helps you complete the form correctly. If your business is located in the United States and the principal business owner has a valid Taxpayer Identification Number (like an SSN or ITIN), you can receive your EIN immediately upon completing the application. Always ensure the website address ends in ".gov" to avoid paying unnecessary fees.
How Much Does a Business Tax ID Cost? - Dissecting Potential Fees#
While the federal EIN is free, the question "how much does a business tax id cost?" can have different answers depending on your situation. Costs typically arise when you use optional third-party services or when you need to register for state-specific tax IDs.
Third-Party EIN Application Services: Convenience vs. Cost#
Many online companies offer to complete and submit your EIN application on your behalf. These services are not affiliated with the IRS and charge a fee for their assistance, which can range from $50 to over $250.
The primary benefit they offer is convenience. For busy founders or those unfamiliar with government forms, these services can provide peace of mind. However, the IRS online application is straightforward and takes only a few minutes to complete, so paying a third party is an optional expense, not a requirement.
Avoiding Unnecessary Fees When Applying for a Tax ID Number#
To avoid paying for a free service, follow these simple tips:
- Apply Directly: Always go to the official IRS website. The URL will end in .gov, not .com or .org.
- Beware of Lookalikes: Some third-party websites are designed to look like official government portals. Double-check the URL before entering any information.
- Understand What You're Paying For: If you choose to use a third-party service, be clear about what their fee includes. Are they just filling out a form, or are they providing additional legal or formation services?
State-Level Tax IDs: Sales Tax and Employer Identification#
After securing your free federal EIN, your next step is to address state-level requirements. This is where you are more likely to encounter application fees. Most states require businesses to have their own tax IDs for specific purposes, such as collecting sales tax or withholding state payroll taxes.
How Much Does it Cost to Get a Sales Tax ID?#
If your business sells taxable goods or services, you will need a state sales tax permit (also known as a seller's permit or certificate of authority). The cost for this permit varies significantly by state. Some states offer it for free, while others charge a one-time registration fee that can range from $10 to $100 or more. In certain cases, a state may also require a security deposit or bond, particularly for new businesses.
State Employer Identification Numbers: Are There Fees?#
If you plan to hire employees, you will also need a state employer identification number. This number is used to report and pay state-level payroll taxes, such as unemployment insurance. Similar to sales tax permits, the fees for obtaining a state employer ID depend on the state. Many states do not charge for this registration, but some do have a nominal fee.
State-Specific Tax ID Costs: A Detailed Look#
To truly answer "how much does a tax id cost," you must look at the specific state where your business operates. Federal EINs are consistently free, but state fees are not. Here is a breakdown of costs for sales tax permits in several states.
How Much Does a Tax ID Cost in Texas?#
In Texas, entrepreneurs can obtain a sales and use tax permit for free. The Texas Comptroller of Public Accounts does not charge a fee for the application. However, a security bond may be required depending on the business's payment history and creditworthiness.
How Much Does a Tax ID Cost in Oklahoma?#
Oklahoma charges a $20 registration fee for a sales tax permit. There is also a small online handling fee. If your business operates from multiple locations, each additional location requires a separate permit at a cost of $10 each. Permits in Oklahoma must be renewed every three years.
How Much Does a Tax ID Cost in North Carolina (NC)?#
North Carolina makes it easy for new businesses to get started. There is no fee to obtain a Certificate of Registration, which is the state's equivalent of a sales and use tax permit.
How Much Does it Cost to Get a Tax ID Number in Georgia?#
Georgia is another state that does not charge a fee for its sales and use tax number. Registration with the Georgia Department of Revenue is free, and the number remains valid as long as the business ownership or structure does not change.
| State | Sales Tax Permit Fee | Additional Notes |
|---|---|---|
| Texas | $0 | A security bond may be required. |
| Oklahoma | $20 | $10 for each additional location. Must be renewed every three years. |
| North Carolina | $0 | No application fee. |
| Georgia | $0 | Valid as long as business structure does not change. |
How Much Does it Cost to Get a Tax ID Number in NC?#
To reiterate for clarity, getting a sales and use tax ID number in North Carolina (NC) is free. The North Carolina Department of Revenue does not charge an application fee, helping keep startup costs low for entrepreneurs in the state.
DMV Identification Cards: Separating Tax IDs from Personal IDs#
It is important to distinguish between a business tax ID and a personal identification card issued by the Department of Motor Vehicles (DMV). A tax ID (like an EIN) identifies your business for tax purposes. A DMV ID identifies you as an individual. These two types of IDs serve entirely different functions and have different cost structures.
How Much Does an ID Cost at the DMV?#
Unlike a free federal EIN, obtaining a personal ID card from the DMV always has a fee. The cost varies by state but typically ranges from $10 to over $50. This fee covers the administrative and production costs associated with issuing a secure, government-backed personal identification document. This is a personal expense, not a business startup cost.
How Much Does an ID Cost in Georgia? (DMV ID)#
To provide a specific example, the cost for a standard, eight-year personal ID card from the Georgia Department of Driver Services (DDS) is $32. This fee is for personal identification and is completely unrelated to the cost of getting a tax ID number for a business in Georgia, which is free at both the federal and state levels.
Understanding "How Much is EIN Application Fee"#
The question of an "EIN application fee" is a common source of confusion, largely due to the prevalence of third-party filing services. It is crucial for entrepreneurs to understand the official stance to avoid paying for something that is offered for free.
The IRS Stance on EIN Application Fees#
The Internal Revenue Service (IRS) is unequivocal on this point: there is no fee to apply for an Employer Identification Number (EIN). The agency provides this service free of charge to encourage business compliance and streamline the process of tax administration. Any fee you encounter for an EIN application is charged by a private, non-governmental company for their assistance.
Conclusion: Navigating Tax ID Costs and Avoiding Scams#
To summarize, the answer to "how much does a tax id cost?" depends on what type of ID you need and where your business is located.
- Federal EIN: Applying for a federal Employer Identification Number (EIN) is always free when done directly through the official IRS website.
- State Tax IDs: Costs for state-level tax IDs, like sales tax permits, vary by state. They can range from free to over $100.
- Third-Party Services: Optional services that file an EIN application on your behalf charge fees for convenience, but they are not required.
- Personal IDs: DMV-issued personal identification cards have fees and are entirely separate from business tax IDs.
To avoid scams and unnecessary costs, always apply for your federal EIN on the official IRS.gov website. For state tax IDs, consult your state's Department of Revenue website for accurate fee information. By understanding these distinctions, you can navigate the process efficiently and allocate your startup capital where it matters most.