An S-corporation, which is often called an S Corp for short, is a type of business that files articles of incorporation in its state and may require an S Corp tax ID number to operate legally and effectively. An S-corporation passes its incomes, deductions, credits and losses through its shareholders, who then report the income on their personal tax returns. This method makes it possible for employees to avoid double taxation. A company must meet several qualification requirements before it can become an S-Corporation.

  • The company must be a domestic corporation
  • The company must only have allowable shareholders
  • The company can be certain trusts, estates or individuals
  • The company cannot have more than 100 shareholders
  • The company can only have one class of stock
  • The company cannot have non-resident alien shareholders, corporations or partnerships

Why Does an S-Corporation Need a Tax ID?

An S-Corporation requires a federal tax ID number for several reasons outside of taxation. Even though shareholders pay the taxes on their personal returns, the company will still need the number to hire employees or if it is involved with non-profits, IRAs, trusts or other exempt organizations. A tax ID number is also important for obtaining credit or opening a bank account using the company’s name. Finally, the tax ID will be required should the company lose its status as an S-Corporation.

Applying for a Tax ID for an S-Corporation

IRS-EIN-Tax-ID allows you to apply for a federal employer identification number online. All you need to do is to provide some information about yourself and your company. The application is fast and easy to understand. Once you submit it, the IRS will make a decision within a few business days. Some people even hear back the very next business day. To learn more about filing for a federal tax ID number, contact IRS EIN Tax ID Filing Service.