When you’re deciding on the right entity type to form your business, it’s imperative that you get all of your documentation and paperwork in order at the same time. While incorporating or forming an LLC is beneficial, there’s one element that has to be done, regardless of the kind of business you’re creating. Today we’re going to talk about how to apply for EIN online, as well as the reasons to have an EIN number.
What is an EIN?
EIN is a nine-digit unique number issued to Businesses by the IRS. Just like your social security number (SSN) is used for your individual taxes, an EIN is the same thing for a company.
What’s interesting about EINs is that they are never re-issued. That means that even if you dissolve your business or merge with another company, your EIN will always be yours and you won’t have to go through the same process that you did before. It can be applied through online, by phone or by email.
Benefits of Having an EIN
Some business entities don’t require this kind of tax ID because you can use your SSN to file business taxes. However, even if you don’t have to get an EIN, it’s always better to apply for it no matter what.
An EIN is beneficial because:
- It keeps your business expenses and debts separate from your personal finances
- It allows you to create a Keogh retirement plan
- It enables you to hire employees and grow your business
- It permits you to open a merchant account with a bank
- It will always be yours whether you dissolve or merge your business with another company.
- It protects your Social Security Number.
All of these things are excellent for you and your company, and having an EIN is necessary to do all of it. Also, some taxes (like alcohol or excise taxes) have to be reported with an EIN, so you may have to file for one anyway.
Getting an EIN
Fortunately, the process for obtaining this tax ID is simple. You just fill out the application form and send it in. For an expedited return, you should use a third-party service to make sure that you get your number quickly. Typically, it can take about a day or so.
There are ways to get an EIN:
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Apply Online
– The online application process is available for all entities whose principal business, office or agency, or legal residence (in the case of an individual), is located in the United States. The Principal officer needs to have a valid Taxpayer Identification Number in order to be able to apply online
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Apply by Fax
-Taxpayers can fax the completed Form SS4. Taxpayers will need to completely fill out everything needed. If the taxpayer’s fax number is provided, a fax will be sent back with the EIN within four (4) business days. You can also apply by Mail and Telephone.
Overall, having an EIN is a necessary and useful part of starting a business. Without it, it may be more difficult to achieve your goals and reach the success you deserve.
Conclusion
Deciding on whether to get an EIN number for your business depends on the structural composition of your Company/ Business. It has its advantages and disadvantages since the process for obtaining the tax id is very simple. And again, having an EIN is a necessary and useful part especially those who are just starting a business. So ask yourself this, Is it really needed and will it really help the Business or the company?
