Tax Registration & Exemption
Complete guides for EIN registration, S-Corp elections, sales tax permits, nonprofit 501(c)(3) exemptions, and payroll tax setup.
Tax Registration Overview
Every business entity needs the right federal and state tax registrations — from your EIN (Employer Identification Number) to sales tax permits, payroll withholding, and nonprofit exemptions. The guides below cover every tax registration type your LLC, Corporation, S-Corp, or Nonprofit may need.
Federal Tax Registrations
Federal tax registration requirements, including your Employer Identification Number and S-Corporation election with the IRS.
Federal — IRS Registration
An EIN (also called a FEIN or Tax ID Number) is a 9-digit number assigned by the IRS to identify your business entity for federal tax purposes. Required for all business entities to open bank accounts, hire employees, and file taxes.
Requirements
- Required for all LLCs and Corporations with employees
- Required to open business bank accounts
- Required for S-Corp election (Form 2553)
- Required for Nonprofit 501(c)(3) application
- Single-member LLCs may use SSN but EIN recommended for privacy
Steps to Register
- Apply online at IRS.gov (instant for US-based entities)
- International applicants must fax or mail Form SS-4
- EIN issued immediately upon successful application
- EntityEngine handles EIN applications as part of formation
S-Corp status allows qualifying corporations and LLCs to elect pass-through taxation, avoiding corporate double taxation while maintaining corporate structure benefits.
Requirements
- Entity must already exist (LLC or Corporation)
- Must have an EIN before filing Form 2553
- All shareholders must be US citizens or residents
- Maximum 100 shareholders allowed
- Only one class of stock permitted
- File by March 15 for current tax year (or within 75 days of formation)
Steps to Register
- Confirm all eligibility criteria are met
- Complete IRS Form 2553 with all shareholder signatures
- File by March 15 or within 75 days of entity formation
- IRS sends CP261 Notice confirming S-Corp election
- EntityEngine assists with S-Corp election as part of formation
State Tax Registrations
State-level tax registration, including sales tax permits and payroll tax withholding — required for most businesses operating in or selling to customers in each state.
State Revenue Registrations
If you sell goods or taxable services, you may be required to collect and remit sales tax in states where you have "nexus" — a sufficient business presence, either physical or economic.
Requirements
- Physical presence (office, warehouse, employees) creates nexus
- Economic nexus: $100,000+ in sales or 200+ transactions
- 45 states + DC have a state sales tax
- Alaska, Delaware, Montana, New Hampshire, Oregon — no state sales tax
Steps to Register
- Determine which states you have nexus in
- Register for a Sales Tax Permit with each state's revenue department
- Configure billing system to collect the correct rates
- File returns on the required schedule (monthly, quarterly, or annual)
If you hire employees, you must register for federal and state payroll tax accounts and withhold applicable taxes from employee wages, including income tax, Social Security, and Medicare.
Requirements
- EIN required before setting up payroll
- Federal: IRS account for 941 quarterly payroll tax returns
- State: Register with each state where you have employees
- Withhold federal income tax, Social Security (6.2%), and Medicare (1.45%)
- Match employee Social Security and Medicare contributions
Steps to Register
- Obtain your EIN from the IRS
- Register with EFTPS (Electronic Federal Tax Payment System)
- Register for state income tax withholding in each state
- Register for state unemployment insurance (SUI)
- Set up payroll processing with your payroll provider
Tax Exemptions
Tax-exempt status for qualifying charitable, educational, and religious organizations — including IRS 501(c)(3) applications and state-level exemptions.
IRS Tax Exemption
A 501(c)(3) designation exempts your nonprofit organization from federal income tax and allows donors to deduct their contributions. This is the most common tax-exempt status for charitable organizations.
Requirements
- Form and register a nonprofit corporation in your state first
- Must have charitable, educational, religious, scientific, or literary purpose
- No private inurement — earnings cannot benefit insiders
- Limited political activity and lobbying
- Assets must be dedicated to exempt purposes on dissolution
Steps to Apply
- Form a nonprofit corporation with your state Secretary of State
- Draft bylaws with required 501(c)(3) language
- Apply using IRS Form 1023 or 1023-EZ (smaller organizations)
- Pay IRS filing fee ($275 for 1023-EZ or $600 for 1023)
- IRS issues determination letter (typically 3–12 months)
- Apply for state tax exemption separately in most states
Get your tax registrations handled — automatically.
AI-powered entity formation, EIN registration, and compliance tracking — everything you need to stay tax-compliant from day one.