For people with businesses in Colorado, you can opt not to use your social security number for your business but instead apply for a unique number for your business. You will be able to enjoy perks after you apply for a Colorado Tax ID without needing to supply your social security number all the time. Giving your own social security number can be troublesome and it exposes you to many things as it is your personal information. This is the reason why federal tax ID was developed for businesses and entities in Colorado.
In order to enjoy the perks of having a federal tax ID, you must apply for one first. If you don’t know anything about the process, you can hire a professional to help you out. You can also do this on your own since processing a Colorado tax ID can be accomplished online. if you are not sure about some things in the process, you can ask tax professionals or someone from the IRS. They will help you understand the process and the requirements needed.
Before applying online, you must know the type of entity you are applying for. Here are the definitions below:
- Sole proprietor is when a person owns a company that is not recorded by the state as an LLC or limited liability company and not incorporated.
- Limited Liability Company or LLC is the type of organization structure that is developed when articles are filed that gives members the protection for a limited liability and they can go through taxation.
- Corporation is a legal entity filed by either a single person or a group. Articles of incorporation must be sent to the secretary of the state of Colorado.
- Estate of deceased is developed once the owner passes away.
- Trusts cover all kinds such as receivership, conservatorships, revocable trusts, custodianships and guardianships.
- Partnership is an organization that is not incorporated and two or more people are sharing the business’ profits as well as liabilities.
- Church includes houses of worship, mosques and temples.
- Nonprofit organizations should also apply for a Colorado Tax ID. Examples of these organizations are community sports teams, public charities, homeowners associations and educational organizations.