State Withholding Number
If you have employees, you generally need to apply for a State Withholding Number. This number is entered on state tax forms used to report state income taxes withheld from employee's pay. Some states, like Nevada, don't impose an income tax on individuals. Check with your state.
If you're a sole proprietor or a partner in a partnership, you are not classified as an employee of your business; you're classified as a self-employed person and are subject to self-employment taxes.
However, if you're business is incorporated and you work for the business, you're a shareholder/employee and subject to the same payroll tax rules as any other non-shareholder employee (i.e. you get a paycheck, income taxes are withheld from your pay, and you receive a W-2).
State Unemployment Account Number
If you have employees, you generally need a State Unemployment Account Number. Check with your state.
For Freelancers and independent Contractors
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Have an accounting or bookkeeping question? Email it to me.
- Return to the Tax Basics for Startups Table of Contents to find related links.