What is Employer Identification Number?
Employer Identification Number or EIN for short is a unique nine-digit number used to identify your business. It is mainly used to identify your business for business related activities such as tax filing, opening a bank account for your business etc. Consider it as a social security number but for your business. Without it, you cannot perform any business-related activities and hence it is necessary for your business. To avoid any unwanted delays, make sure you get one as soon as possible.
Requirement of EIN
EIN is necessary for all businesses that retain employees. However, it is not only limited to them. This number is also required from businesses that act as partnerships and or corporations. This essentially brings the businesses under tax umbrella, making their revenues taxable. This is a legal requirement by the Internal Revenue Service (IRS) and must be fulfilled however it does not apply to all sorts of businesses. If your business falls under any of the following categories, you need an EIN:
- Limited liability companies
EIN is not a requirement for sole proprietorships. However, you need to get one if your business plans to perform any if not all the following activities:
- Have employees or plan to hire them
- Filing for bankruptcy
- Inheriting or buying a sole proprietorship
The following are not required to have an EIN:
- Independent contractors
- Home run businesses
Although it may not be a requirement for you to get an EIN, it is always a good thing to get one as it comes with some benefits.
Why use EIN instead of Social Security Number?
Are you wondering why you need an EIN number although it is not required by the IRS for your business? Well, the answer is simple. EIN helps keeping your business finances separate from your personal finances. Social Security Number can be used to for simpler business structures that do not have any employees. However, it lacks one major thing. It does not differentiate your personal finances from your business finances which makes you liable to identity theft. EIN essentially isolates your Social Security Number and reserves it for your personal needs which essentially makes your personal assets much safer. This is a big reason why you should use EIN for businesses even though they are not required by the IRS to do so.
Why you need an EIN?
Apart from the benefit mentioned above, there are several reasons why you need to get an EIN today and why they are important:
- Many states now require you to have an EIN before you can apply for a business license. This although varies from state to state, highlights the importance of EIN and why you should get one. Before you take any step towards opening your own business, make sure you check whether it is required in your state or not. Regardless of what the laws of your state are, you should get an EIN for your business anyway just to be on the safe side.
- EINs are now becoming mandatory for businesses to open business bank accounts. This essentially means that you cannot perform bank related activities for your business until you have an EIN. Hence, you should get an EIN whether it is required for your business.
- Having a valid EIN for businesses is also required by some banks to approve a loan. Since, EIN acts as an identity number for your business, it makes it very important, and a lot of banks require it before you can even apply for a loan.
- Businesses grow as they earn more and more profit. This usually translates to an increase in workflow which poses a requirement for hiring of employees. However, businesses cannot hire employees without an EIN number. If your business is growing or you plan on hiring new employees get your EIN number as soon as possible. Not having one can cause delays in the hiring process as you cannot generate payrolls without having an EIN. All of this translates to causing a damage to your business.
- EIN is a must for filing taxes. Not having an EIN before tax filing means you cannot file a tax at all. This is a serious issue as it can make you liable to tax evasion, tax fraud etc. which can not only cause monetary damage but also a damage to your reputation. Usually, such things don’t go off easily and cause a huge dent in the bank. To avoid all the hassle that comes with such allegations, always file your tax on time. However, before you proceed to that step, make sure you have an EIN so that it does not cause any unwarranted delays in your tax filing process.
Federal Employer Identification Number (FEIN) vs Employer Identification Number (EIN)
FEIN is the same as EIN with one difference. FEIN is issued by the Federal Government. It allows your enrollment in the electronic federal tax payment system. Instead of doing everything manually, this system allows you to make tax payments over the phone or online. This causes ease in tax filing and makes the process hassle free.
How you can apply for an EIN?
Applying for an EIN is a free and straight forward procedure. You don’t need to spend any money while applying for the EIN however, it comes with benefits that can help you grow your business in the future. You can either apply online, by mail or by fax however applying online is much more simple, straight forward, and quick. To get an EIN assigned, you first need to fill in some personal information such as business name, mailing address, name of the business owner etc. Once you are done filling the application, you can get an EIN assigned to you.
This process can easily be conducted by going straight to the IRS website. Since this process is straight forward and requires no fees. You don’t require a third party to help you in filling out the application. IRS website has all the information you need and if you are unsure of what category your business lies in, it guides you through that process as well. Filing for an EIN has never been easier, thus get yours today to unlock the full potential of your business.
Why you need a lawyer?
A lawyer is someone who understands the law at full depth and practices it. They know about all the legalities of any subject related to the area of the law they practice. This makes them the ideal person to consult when you need any law related services, as they can guide you in the best way. When hiring a lawyer, always confirm their credentials, conduct thorough interviews to make sure they are the right lawyer for you.
You might be thinking, “I don’t need a lawyer for my business. What do lawyers have to do with businesses.” Well, it is partially true. You don’t a lawyer to do business however, you need one for all the legalities that a business must take care of. For example: tax filing, etc. Lawyers take care of all the paperwork, make sure everything is in order and represent you in court of law if need be. Whether you are a small business or a large corporation. Having a professional lawyer by your side always comes in handy. This way you don’t have to make do with a lawyer who might not be as good as a professional lawyer.
Richard S. Kolomejec
Apart from these services you might also need to expand your business in a foreign country. For this purpose, you need a lawyer who understands practices such an area of law that deals in immigration and its related things. There are many things that fall under the umbrella of immigration law and business expansion etc. are also overlooked under the same category. To make sure you don’t get penalized for something you didn’t know about the host country. You wish to expand your business to, you need a lawyer who is native to that country.
Richard S. Kolomejec is an attorney at law from San Francisco and is here to help you with all queries regarding immigration to the United States. Him and his firm are committed to providing you with the best legal help / defense you require to make sure you get all your legal rights. This firm is especially the best option for individuals who are seeking immigration to the United States as we provide a wide range of immigration law services.
Are you not sure about what legal route to take or have you found yourself in a legal mess and require consultation? Don’t worry, we provide free consultation and charge low fees for immigration law services. This means you don’t have to spend a lot of money to get the legal defense you deserve. So, what are you waiting for? Book an appointment today and get all the legal help you need today.