What is an EIN?
An EIN, or Employer Identification Number, identifies a business with a series of 9 digits. It helps the IRS track and file taxes for a business entity. It functions very similarly to a Social Security number, but instead of an individual, it applies to a company. When you file for an EIN, you’ll need to supply the IRS with your SSN. This connects you to the business and marks you as the responsible party. Responsible parties are usually the owner. The responsible party oversees the business in all its movement of funds and assets.
Do I need an EIN?
Employer Identification Numbers are required for most businesses. If your company hires employees, it needs an EIN. Really, the only businesses that don’t require an EIN are sole proprietors. In other words, companies consisting of 1 person can generally avoid filing for an EIN.
However, if you incorporate, form a partnership or limited liability company (LLC), or purchase another business, you must file for an EIN. Even if you operate additional businesses as a sole proprietorship, you require an EIN. Though, even if you don’t legally need an EIN, there are some benefits to procuring one.
Should I get an EIN even if I don’t need one?
An EIN benefits sole proprietors, or independent contractors, in a few ways. First, it adds a professional touch to your business. If you use your SSN for business, you force clients to deal with your taxes. When you cross a certain threshold, a client may have to withhold taxes. However, an EIN ensures only you deal with your taxes. Potential clients prefer less hassle.
Second, an EIN protects your personal SSN from potential identity theft and fraud. As an independent contractor, your clients require a tax ID number. An EIN keeps your SSN secure by minimizing its use. Identity thieves target social security numbers to file fraudulent tax returns and receive a tax refund in your name. An employer identification number limits the exposure of your SSN.
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In order to save yourself the time and effort, we file on your behalf. Our experts have a familiarity with the employer identification number application. Our team eliminates the possibility of any mistakes. We also work with the IRS in the event further documentation or clarification is required. Our expertise in this field works to your advantage. We expedite the process. We take care of every detail so you can focus on your business.
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