Princeton,NJ/ 360prwire/ December 5/
One of the first steps in starting a business should be obtaining an Employer Identification Number. The application process is free (and simple! ), and you’ll need that number during tax season. Read on for details.
What is an EIN?
Employer Identification Number stands for Employer Identification Number. Your business is identified by a nine-digit number assigned by the IRS. When you file any federal tax return, you’ll need to identify your business using this information. Sometimes, it is referred to as a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (TIN).
For businesses, EINs are like social security numbers. Give out your EIN only when it is necessary it can be used to steal your identity if it falls into the wrong hands.
Does your business need an EIN?
Employer identification numbers are used by the IRS to determine which business tax returns taxpayers must file, so nearly all self-employed people and small business owners will need one at some point (even tax-exempt and non-profit organizations). The following questions must be answered yes if you want an EIN:
- Is your business employing anyone?
- What type of business entity does your business operate as? A C corporation, an S corporation, a limited liability company, or a partnership?
- Is it your responsibility to file employment or excise tax returns?
- Is income other than wages withheld from non-residents?
The IRS states that sole proprietorships don’t require an EIN-just their Social Security number (SSN). The EIN is still required even if you are a sole proprietor who wants to do any of the above (hire employees, incorporate, file excise tax returns, etc.).
It is still a good idea to get an EIN even if it is not required by law. Applicants for business licenses and loans also need EINs to open business bank accounts and credit cards. EIN is required for Amazon too.
How to Get Help?
Consult a professional to apply for ein number. Members of E Delaware are able to consult with our tax professionals unlimited times on demand. They offer real-world guidance.