Getting a Tax Identification Number (TIN) and Avoiding Withholding Taxes

When you start your business you may need to get a TIN (“Taxpayer Identification Number”) or EIN (“Employer Identification Number”) and/or a business license from your city or county. The business license will typically depend on what industry you operate in, and the city, county, and state’s requirements. Some common license examples are business operating permits, zoning and land use permits, building permits, etc. 

A TIN/EIN is typically a requirement if you’re going to pay employees, if you operate as a corporation or partnership, or work in certain industries (more info here). If you are an individual freelancer or you work for a ride sharing company for example, you typically do not need a TIN/EIN and can just use your social security number. 

When you start working with your client, they may ask you to fill out a W-9 form and provide your TIN or social security number. The W-9 form just provides the client with the information they’ll need to file their 1099 tax forms at year end. The client will use your TIN or social security number to report your earnings to the IRS. If you don’t provide a TIN, you may have 24% withheld from your earnings and sent to the IRS.