If you’re thinking about starting a business and joining the estimated 33.2 million small enterprises in the US, there are numerous procedures you must do to create a legal organization. You’ll likely need to secure an employer identification number (EIN), which is one step.
Questions concerning EINs, such as whether having one is required, what it’s used for, and what to do if you forget the one connected to your firm, may arise in the minds of some ambitious small business owners. Here is what you need to know if you belong to that group.
Does Every Company Need an EIN?
Although almost all businesses are advised to have an EIN since it helps you better distinguish between work and personal activities, it is only sometimes necessary. For instance, A sole proprietorship without employees might not require an EIN.
An EIN is necessary in a variety of circumstances, though. For instance, regardless of the nature of your business structure, you’ll need an EIN if you have employees. Additionally, even without employees, partnerships and corporations must have an EIN. Any company that files employment, excise, alcohol, tobacco, and weapons tax filings or intends to offer a solo 401(k) or Keogh plan must comply with the same rules.
There are various circumstances where having an EIN may be required. For instance, even if a person runs a single proprietorship, certain banking institutions demand EINs when opening business accounts. In some circumstances, states also require EINs for business licenses and permits. An EIN is, therefore, normally advised for all kinds of business enterprises.
An EIN also offers some additional safeguards. For instance, it can lessen the necessity for you to disclose your Social Security Number (SSN), which might lower your risk of identity theft. Additionally, it makes the hiring process simpler in the future, which may be useful as your business expands.
How Can I Use My Company’s EIN?
Once you obtain an EIN, you can use it for a range of financial operations relating to your firm. Making payments linked to taxes or filing federal taxes is one of the most popular uses. You can also apply for any necessary licenses or permits using the EIN.
When opening commercial bank accounts, an EIN is frequently needed as well. Additionally, most lenders demand an EIN if you’re requesting a company loan.
What Should I Do if I Can’t Remember My Company’s EIN?
You have a few options if you need to find your company’s EIN. You can start by looking for the notice the IRS initially sent out after processing your application. Second, if you have previously filed a tax return, you can review them because they will include your EIN.
Sometimes, ask the banking institution where your company’s bank account is for your EIN. You can also study the relevant documents because your EIN is listed on state filings for licenses and operating permits.
Finally, you can contact the IRS Business & Specialty Tax line if you are still looking for your EIN. If you are listed as authorized, the representative will inquire about your identification and request your EIN.