What do you need to know when you start a business? Well, that’s a tricky question, mostly because it depends on what exactly it is you’re asking about: are you asking how to register a business or create an LLC? Are you asking how you come up with an idea for a business? Of course, these different questions all come with even more questions and then even more questions, until eventually you find yourself overwhelmed to the point where you can’t even keep track of what you’re doing anymore. As cool as starting a new business is, the whole process can feel like too much at times, possibly leading you to lose sight of why you decided to start a business in the first place.
At Payday HCM, we understand the stress of starting a new business. We’ve had plenty of current clients begin using our services during the early stages of their company. There are a lot of questions to be asked and a lot of answers to be found. Unfortunately, it can feel like either you don’t know what questions to ask, or that there are too many people out there claiming to have the answer. When it comes to things like taxes and understanding what you, as a business, need to register for and what ID numbers you need to get, it’s probably a bit of both of those.
That’s why, in this article, we’ll be going over the three different tax ID numbers that new NM businesses need to know. We’ll be focusing on three different ID numbers:
- Federal Employer Identification Number (FEIN)
- New Mexico Business Tax Identification Number (NMBTIN)
- Unemployment Insurance Employer Account Number (EAN)
If those all just sound like a bunch of random words and letters, that’s alright—we’ll be breaking down what all of these are as well as why they are required and the process for receiving all of them. By the end of this article, you’ll have all the knowledge you need to approach (at least this portion of) starting a business with confidence.
Federal Employer Identification Number (FEIN)
Firstly, we’ll go over what a federal employer identification number (FEIN) is as well as how to apply for one.
What Is A Federal Employer Identification Number (FEIN)?
The Federal Employer Identification Number (FEIN) is like a Social Security number for your business: it’s used by the IRS to identify your business and is used for yearly tax filings. The number is more officially referred to as an Employer Identification Number (EIN), but if you see FEIN or EIN, just know that they are the same thing.
Of course, like your Social Security number, your EIN is used for a lot more than just tax identification purposes. You’ll need an EIN in order to open a bank account, pay employees, and apply for business licenses or permits. There may also be certain state-level identification numbers you need that you won’t be able to acquire without an EIN.
How Do I Get An Employer Identification Number (EIN)?
There are a few different ways you can apply for an EIN. The first, and easiest, way is online through the IRS’s designated EIN application portal. The only things you need are the business type and the Social Security or taxpayer ID number of whoever is in control of the business. If you have a third party applying for the EIN, they’ll need a signed authorization.
If approved, an online application will provide you with an EIN immediately. Otherwise, businesses can either fax or mail a Form SS-4 to the IRS in order to apply for an EIN. A faxed form will receive a response in about four business days, whereas a mailed-in application will take around four weeks to process.
New Mexico Business Tax Identification Number (NMBTIN)
Next, we’ll go into more detail on what a New Mexico Business Tax Identification Number (NMBTIN) is and how you acquire one.
What Is A New Mexico Business Tax Identification Number (NMBTIN)?
Much like an FEIN, a New Mexico Business Tax Identification Number, or NMBTIN (unfortunately does not acronymize as easily as an EIN), allows anyone who is “engaging in business” in the state of New Mexico to pay the associated taxes with running a business, like wage withholding or gross receipts tax.
The NM Taxation & Revenue Department defines “engaging in business” means carrying out any activity with the purpose of receiving either direct or indirect benefit. Once you complete the application for the NMBTIN, you’ll receive individual state tax ID numbers for the different taxes that fall within the scope of the NMBTIN.
One important thing to note is the process for ensuring that the wage withholding tax and the workers’ compensation fee are added to your NMBTIN. They exist in the NMBTIN application form under section 11.
How Do I Get A New Mexico Business Tax Identification Number (NMBTIN)?
Similarly to the EIN application process, individuals looking to obtain an NMBTIN have the option of applying online through the Taxpayer Access Point portal or by mail by filling out the ACD-31015 Business Tax Registration form and mailing it to the Taxation and Revenue Department. Response times will vary, and the registration certificate will be mailed back to you.
Businesses don’t necessarily need an EIN before applying for an NMBTIN, although you can use it as part of the process; otherwise, you will need your Social Security number or an Individual Taxpayer Identification Number (ITIN). Businesses applying online can contact the Taxation and Revenue Department for more information on adding the wage withholding tax and workers’ compensation fee ID numbers to their NMBTIN.
Unemployment Insurance Employer Account Number (EAN)
The final tax ID number we’ll be going over is the NM unemployment insurance Employer Account Number (EAN).
What Is An Employer Account Number (EAN)?
All businesses in the state of New Mexico are required to pay both a federal unemployment tax (FUTA) as well as a state unemployment insurance tax (SUI). In order for businesses to pay their SUI tax, they’ll need to register with the New Mexico Department of Workforce Solutions and acquire an Employer Account Number.
When you register with the NDWS, you’ll receive your EAN, which will allow you to log in to the Unemployment Insurance Tax System. This system allows you to manage your account, report any wages that have been paid, as well as pay any contributions you may have due.
How Do I Get An Employer Account Number (EAN)?
Out of the three, registering with the NDWS and acquiring an EAN is probably the most complicated process, although it’s still relatively straightforward and similar to the previous two. Again, businesses can go to the online portal in order to receive an EAN and ultimately register with the UI Tax System.
There are a few key things here to remember when starting this process, however. When registering with the NDWS, you will need an FEIN in addition to other information like business name and Social Security number. The EAN retrieval process is also dependent on already having employees and having paid employees; this means you can’t begin this process until after you pay your employees in the calendar year.
The UI Tax System will require you to enter specific information about your employees and the wages paid for their services, including how many employees, the date when services were first performed, and the date wages were first paid for said services. All quarterly wage and contribution reports must be filed electronically.
Make Starting A Business Less Taxing
Starting a business is no easy feat. We could spend an entire article—actually, probably many articles—just talking about all the different things you need to know when starting a business. As such, if you’re going through this process, it’s likely that you’ve already become familiar with some of it, but are also constantly learning about new things you have to do seemingly every minute. It can be a very overwhelming and stressful process, one that can unfortunately overshadow the fun and excitement of starting a new business. With the information provided here in this article, we hope that we can not only help to clarify some of the processes you’ll need to do when you start a business, but also help you get back to that fun and excitement that led you to start a business in the first place.
When going over compliance and tax ID numbers, it’s usually best to have a trusted partner by your side to ensure your business has everything it needs and that it's compliant. In the case of tax ID numbers, this means ensuring you have a knowledgeable and trusted payroll provider. Unfortunately, with so many options, it can be hard to know which one is best for your business. Check out our article on the 10 best payroll providers in Albuquerque, NM, to find out which is the best choice for your organization.
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