As a business owner, there are a lot of different things you have to do to ensure that you can run your company as well as possible. However, the first thing you should do is get an employer ID number. Regardless of the entity type you choose (LLC, corporation, partnership), an EIN is going to provide a lot of different benefits. Today, we’re going to go over how to get a federal tax ID and how to apply for EIN online.
What is an EIN?
Simply put, and EIN is a nine-digit tax number issued to your business from the IRS. The purpose of this number is to create a unique entity for your company that is separate from any owners or operators.
For example, a sole proprietor may be able to use his or her social security number (SSN) to file taxes related to business expenses, but if you have any employees or partners in the company, you will need to create a different entity to keep things neat.
How to Get an EIN
Fortunately, the process for obtaining this number is really simple. You can either file all of the necessary documentation with the IRS directly, or you can use a third-party service to handle all of the details for you.
In either case, you can usually get your EIN within a day or so if you file online, and you can start using it immediately. However, it can take a few weeks for the number to get into the IRS database, so you won’t be able to file taxes until that happens.
Why Get an EIN?
As we mentioned, there are a lot of benefits of having an employer ID number. Here are the best reasons to get it:
- You want to have employees
- You want to limit your financial liability to the company
- You want to be able to open a business banking account
- You want to have a Keogh retirement plan
Getting an EIN is a simple and necessary step towards getting your business off the ground. Doing this will offer much more flexibility and enable you to grow your company as you see fit.