All businesses, regardless of how big or small need one thing: a tax ID number. Back in the old days, this was a cumbersome process that took weeks. But thanks to our buddy, the internet, all that’s changed. So, the first thing you can do when starting your consulting business is get legit by snagging a tax ID.
Got 5 minutes? Then get your tax ID!
If you’re really old-school, you can fill out and mail a form to the IRS, then wait, and wait, and wait.
But if you’re impatient like me, you can go straight to the IRS website to snag your federal tax ID–otherwise known as a FEIN (or federal employer ID number) or TIN (tax ID number). Walk through the online application, and in about 5 minutes, you’re legit and have your own FEIN. And the price is right: free. (Well, you’ll eventually have to pay taxes using it, but you already knew that…).
So now what?
Granted, getting your FEIN is the first step. But it’s an important step. Here’s what you can do now that you have a FEIN:
- Open a bank account (which you’ll need to keep business finances separate from your personal finances)
- Apply for a business license
- File a tax return
You might even be able to get a discount when making purchases if you mention that you have a tax ID number.