Everything You Need to Know About State Tax ID Numbers

When you think about establishing your small business, you might picture addressing federal requirements to get your operations up and running. While meeting those requirements is an important aspect of starting your business, don't forget about your responsibilities to your state. Begin fulfilling your state obligations by obtaining your state tax identification number.

Your business's state tax ID is necessary to perform many of your core duties, such as applying for state-level permits or paying state income tax. Failing to obtain this ID can endanger ongoing compliance with state and local regulations that govern your industry. When compliance obligations slow you down, turn to 1-800Accountant, America's leading virtual accounting firm, for expert support. When you do, your designated 1-800Accoutant team helps you address both federal and state compliance from the outset, so you can focus on maximizing the success of your launch.

For entrepreneurs addressing state-level requirements on their own, use this guide to learn everything you need to know about state-level tax IDs. You'll come away understanding what a state tax ID is, its purpose, and broad steps you can take to obtain yours. 

What is a State Tax ID Number?

A state tax ID number is the unique identifier assigned by the state to a business entity or organization. The state tax ID is associated with the state in which the business operates, and is also known as a: 

• State employer identification number (EIN)

• Employer’s state ID

• State tax registration

State tax ID numbers are similar to federal EINs in that they are assigned to businesses by a government entity, which allows these entities to employ workers. 

However, federal EINs are used by the Internal Revenue Service (IRS). At the same time, state tax ID numbers are utilized by that specific state for tax administration purposes, typically by that state’s Department of Revenue or a similar agency. 

What is the purpose of a State Tax ID?

State tax IDs serve several purposes, primarily related to filing taxes (payroll and excise taxes), collecting sales tax, obtaining licenses and permits, and hiring employees. State tax ID numbers are used by the state and local tax authorities to identify tax reporting entities and to facilitate accurate tax administration. 

State tax ID numbers also allow businesses to apply for Resale Certificates (also referred to as Sales Tax Permits or Seller’s Permits), which allow for tax-exempt status. This tax exemption enables a business entity to purchase goods and products for resale at retail. When those goods and products are sold to the final customer, the retailer collects the sales tax.

State tax ID numbers can also be useful for sole proprietors who wish to protect themselves against identity theft.

Who Needs a State Tax ID?

You'll need to obtain a state tax ID if your business will: 

• Hire employees

• Collect sales tax (retail/e-commerce)

• Owe excise taxes (alcohol, tobacco, fuel, cannabis)

You must understand your state’s rules and requirements to ensure ongoing compliance with your local and state tax laws. 

Sole proprietors and single-member LLCs that do not have any employees can use their Social Security Numbers (they can choose to obtain an EIN if they want, but it is not required) instead of a state tax ID. There are also special considerations for non-profits and multi-state operators. In these scenarios, it's best to check with your state's rules before proceeding. 

How Do You Apply for a State Tax ID?

Check with your state government’s Department of Revenue for more information on how to obtain a state tax identification number. Applications and processes typically vary by state, but should be a relatively simple process.

Follow these general steps to obtain your state tax ID: 

1. Visit your state’s Department of Revenue (or equivalent).

2. Provide entity details (EIN, formation documents).

3. Pay the required filing fee.

Processing times are typically instant for online applications, whereas other methods may take several weeks to complete. Note that if you are relocating to another state, you will need to reapply.

If you’re seeking guidance and support in establishing your small business, consider 1-800Accountant’s entity formation services. We efficiently form small businesses, so entrepreneurs can focus on what matters—running and growing their latest venture.

State Tax IDs and 2025–26 Compliance Updates

There are numerous state tax ID compliance updates for 2025 and 2026 that you should know about, including: 

• New York LLC Transparency Act (effective January 1, 2026): This act requires additional corporate transparency in the form of the disclosure of beneficial owner information for businesses that operate in New York. This makes ongoing compliance more complex for businesses in New York.

• Payroll/Reporting Deadlines: 2025 quarterly IRS Form 941, Employer's Quarterly Federal Tax Return deadlines include April 30, July 31, October 31, and January 31, 2026. Federal Unemployment Tax Act (FUTA) deposits follow the same schedule.

• Information Return Changes: 1099 thresholds increase to $2,000 beginning in 2026. While the New York LLC Transparency Act increases the obligations of eligible businesses, this increased 1099 threshold likely reduces the responsibilities of small business owners, particularly for those who rarely use nonemployee workers.  

It's essential to understand these changes and implement protocols to ensure ongoing compliance. 

Common Mistakes to Avoid With State Tax IDs

Steer clear of these common mistakes small business owners make when securing a state tax ID:

• Avoid penalties and fines by registering when you're required to do so.

• Don't assume a federal EIN is sufficient to begin operating your business legally. Check with state authorities for a better understanding of your business obligations.

• Forgetting to update your state tax ID when expanding into another state can cause compliance issues.

• Stay away from potential privacy and security risks by using your state tax ID instead of your personal Social Security Number.

FAQs About State Tax IDs

Is a state tax ID free?

If you obtain your state tax ID directly from your state's Department of Revenue, it is typically provided free of charge. Filing online is generally the fastest and easiest way of obtaining your state tax ID.  

Can I use my EIN instead of a state tax ID?

Generally, you are not permitted to use a federal EIN in place of a state tax ID. They are issued by different authorities and apply to other aspects of your small business. 

Do online-only businesses need one?

Businesses that exclusively operate online, such as an e-commerce business, typically need to obtain a state tax ID, especially if they collect sales tax or have employees.

How long does approval take?

State tax ID processing times are usually instant for online applications. Expect to wait weeks if you submit your materials via a different method.

What happens if I operate without one?

Operating your business without a state ID can lead to severe penalties, challenges, and potentially the suspension or closure of your business. However, there are exceptions. For example, sole proprietors and single-member LLCs without employees can use their Social Security Numbers instead of a state tax ID without issue. 

Obtain your state tax ID number with 1-800Accountant

Obtaining a state tax ID is a crucial step in establishing your business, ensuring compliance, facilitating payroll, and supporting growth. While applying for your state tax ID and EIN is a relatively straightforward task, it's one that many small business owners miss, resulting in potential penalties and ongoing distractions.

Need help registering your state tax ID? Schedule your free 30-minute consultation with 1-800Accountant — our experts will accurately and efficiently handle the paperwork, allowing you to focus on running your business.