Employer Identification Number: What You Need to Know
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After planning what type of business you will build, where it will be located and the resources you will need, so what’s next?
Everything is now all set and you are about to file your business permit, then you have come across the application form- Employer Identification Number.
Employer Identification Number, what is it?
The Employer identification Number, commonly called EIN, is a nine digit number assigned by the Internal Revenues (IRS) that works like a Social Security Number for businesses. This is issued for the purpose of identifying the businesses within the United States. Since we all know that any type of business is required to file a tax return every year, this will help the IRS track down companies violating the law. You have to remember that this unique identification number is referred to as Tax Identification Number (TIN) when used for identification but is known as employer identification number when used for reporting employment taxes.
Who needs an EIN?
All business entities including new ones must get an EIN to make their business journey smooth sailing. The only exemption to getting an EIN is the sole proprietorship that does not have any employees. This type of business can also obtain an EIN if they want to. The advantage of having an EIN is that they don’t have to use their Social Security Number on bank accounts or any legal paper works.
To make easier to understand, you must get an EIN when:
You have employees in your business or company
You purchase an current business
You change the type of your organization (example: from a sole proprietorship to a partnership or a corporation)
You want to have different bank accounts. Use the EIN for business accounts and your Social Security Number for your personal accounts
You have a qualified retirement plan
You file tax returns on: employment, excise, tobacco and alcohol
Since the number is unique to a particular business, you cannot use the same EIN when you transfer or sell your business to another person. The number is in this format: 12-3456789, that is very much like your Social Security Number.
There are many ways of applying for an EIN. You can download a form (form SS4), fill out all the required information and send it thru mail or fax. Other methods include doing the application over the phone or doing it online.
Now you know about EIN. You’re all set with your own business venture. Grab your EIN and set your own track into the business world.
Are you ready to get an EIN number for your business?
Don’t waste your money; before you consider paying for a third party service for a Federal Employer Id Number (most run over $100) and running the risk of releasing your personal information to some unknown website probably oversees. Let me show you a better way to get a Tax Id Number. And don’t waste your valuable time searching all over the internet by yourself to figure out the best way to apply for an EIN number. The homework and research has already been done for you. All you have to do is go to www.irsein.org/g and watch a free step by step video and learn how to get your own IRS number for your business within the next 15 minutes.