Federal Tax Id # And Vendors License Questions

Business By cakegroove Updated 15 Jun 2010 , 1:51pm by costumeczar

cakegroove Posted 14 Jun 2010 , 6:15pm
post #1 of 6

I am new to this business. I am working out of my home under the pretense of "Cottage Foods". I have recently insured myself. I have cake jobs lined up through September currently. I would like to start purchasing things in bulk but the places I want to go, require a vendors license. If I am researching properly, acquiring a vendors license requires me to have a Federal Tax ID number? Here's my question(s): If I am not charging tax for my food product, why do I have to sign up for a Federal Tax ID number? Can I get a vendors license without having a Federal Tax ID number? Thanks for any advice.

5 replies
BeanCountingBaker Posted 14 Jun 2010 , 6:43pm
post #2 of 6

A federal tax ID number has nothing to do with sales tax. This is the number associated with the sales or profit you will be reporting as income to you or your business. In some instances you can use your social security number as your tax number. In the case of a vendor's license that may be a state requirement or a food service requirement, I can't be of help in that matter. I recommend you ask a local accountant about obtaining a FEIN number and whether you need to take this step at this time.

CWR41 Posted 15 Jun 2010 , 4:28am
post #3 of 6

www.IRS.gov/businesses/small/article/0,,ID=98350.html

elvisb Posted 15 Jun 2010 , 5:02am
post #4 of 6

You need a federal tax id number to report your income for taxes. I have a federal id number, but a friend who also has a home bakery said her accountant files her income under her social security number. Both ways are fine as far as the IRS is concerned so long as you're reporting your income, but she orders some of her supplies through me because the company we order from won't let her since she doesn't have an id number. She's still legal to the IRS, but the bakery company doesn't see it that way. They want to see your business name on a form, not your first and last name. This proves to them that you're a legal business. It's free to get the id number, by the way, and it does open a lot of doors for your business. And check with your state if you need to charge sales tax. Each state has it's own rules about prepared/non-prepared foods and which items should be taxed. A sales tax permit is free to apply for also.

emrldsky Posted 15 Jun 2010 , 12:40pm
post #5 of 6
Quote:
Originally Posted by elvisb

You need a federal tax id number to report your income for taxes. I have a federal id number, but a friend who also has a home bakery said her accountant files her income under her social security number. Both ways are fine as far as the IRS is concerned so long as you're reporting your income, but she orders some of her supplies through me because the company we order from won't let her since she doesn't have an id number. She's still legal to the IRS, but the bakery company doesn't see it that way. They want to see your business name on a form, not your first and last name. This proves to them that you're a legal business. It's free to get the id number, by the way, and it does open a lot of doors for your business. And check with your state if you need to charge sales tax. Each state has it's own rules about prepared/non-prepared foods and which items should be taxed. A sales tax permit is free to apply for also.




Just wanted to clarify that a sales tax permit may have a fee, depending on your state. My state charges $25 for the permit, and I'm in Indiana. icon_smile.gif Others might now.

But the federal tax id number (or in my case, employee identification number) does open a lot of doors.

Good luck!

costumeczar Posted 15 Jun 2010 , 1:51pm
post #6 of 6

I'm an LLC, so I file federal taxes on my income tax using my own SS number, but my state requires me to use a FEIN to file state sales taxes.

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