Integral Revenue Services or IRS issues Employment Identification number (EIN), which is a nine-digit number issued to facilitate the business entities in preparing and furnishing annual tax statements. Just like individuals needs to have a social security number to reside in the United States, it is very necessary that most businesses operating in the United States have an EIN and make timely submission of tax statements about their business every year.
As a business owner, it is important for you to possess sufficient knowledge as to which businesses need to have EIN and the significance of having an EIN for your business. This post is intended to provide you with a basic understanding of EIN and some of its benefits.
How can you obtain EIN?
The traditional way of EIN application is a little complicated process, which requires you to fill exhaustive forms and can sometimes become a cumbersome and time-consuming process.
You need to provide multiple details from the legal name of your business entity and the trade name if any. You need to provide the complete address of your business location including the street name, county, and the state name, where your business is located.
To avoid the complications of filling numerous forms, you can simply apply for EIN online, which is the fastest and easiest way of obtaining an EIN for your business and enjoy the advantages it offers to your business immediately.
What are the needs and benefits of applying EIN for your business?
EIN is very important to provide a necessary report about employment taxes or give tax statements to the tax lawyers. Your business needs to have an EIN to open a business bank account or hire employees for your company. You may also need to have an EIN for your business, depending on the specific nature of your business operations to file taxes and submit relevant documents relating to tax payments of your employees, members or shareholders of your business.
As a business owner, you are legally required to make use of your Social Security Number (SSN) or your business EIN to identify your business entity with the relevant tax authorities. Numerous sole proprietors, who were earlier using their SSN on their official documents, have started using their business EIN in place of SSN to avoid their SSN getting stolen. The theft of sensitive personal information can become quite risky, and hence it is highly recommended that you use your business EIN and avoid using your SSN in your tax documents.
What types of business entities need to have an EIN?
EIN is not compulsory for every business to have but it is quite advantageous to have an EIN for your business. IRS uses this tax ID to track tax obligations of various legal entities such as Limited Liability Company, Non-Profit Organization, Corporation, Personal Service Corporation, Church Controlled organization, Partnership companies, Estate of Deceased Individual, Trust and Individual business/ Sole Proprietor.