So what exactly is an EIN?
I’m sure you’ve heard it before.
It probably sounds like one more thing that new business owners need to “deal with”.
It did for me.
Let’s change that.
IN THIS ARTICLE I AM GOING TO SHOW YOU:
- what an EIN is
- the benefits of an EIN
- who needs an EIN
- how to get an EIN
- how much an EIN costs
- what to do after you get the EIN
WHAT IS AN EIN?
You may be wondering what this nine-digit number is with a hyphen in between the first two numbers.
That is an employer identification number, or simply known as EIN.
An EIN, or employer id number, is your federal tax ID number for your business entity.
An EIN usually looks like this 82-7685736
Sometimes an EIN is referred to as:
- TIN – Taxpayer Identification Number
- FEIN – Federal Employer Identification Number
- FTIN – Federal Tax Identification Number
Think of an EIN as a social security number for your business. Every business has a unique EIN.
Each LLC or “entity” needs its own EIN.
BENEFITS OF AN EIN – WHY YOU NEED ONE
Your business needs an EIN to do the following:
- file taxes
- open a bank account
- build credit
- apply for resellers permits
- apply for wholesale licenses
- apply for business licenses
- credit card processing
- amazon reselling
- bank loans
- prove the business is real
Once you obtain an EIN for your entity, you can register your entity, open a bank account, apply for loans, build credit and much more.
For most businesses, an EIN is a requirement. Even if it isn’t, it’s still a good idea.
WHO NEEDS AN EIN?
The process of applying is quick and easy.
IRS says you have to get your own EIN if you can answer yes to any of the following questions:
- Do you have employees?
- Do you operate your business as a corporation or partnership?
- Do you file any of these tax returns: employment, excise, alcohol, tobacco, and firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following organizations?
- Trusts, except individual grantor, owned revocable trusts, IRAs, exempt organization business income tax returns
- Real estate mortgages investment conduits
- Non-profit organizations
- Farmers cooperatives
- Plan administrators
Let me make it simple for you!
Get an EIN – no matter what!
Even if you are just a sole proprietor
The good news is that they’re FREE to get.
Let me show you how.
HOW TO GET AN EIN NUMBER
Before you apply for an EIN, you want first to establish your business with the state.
This means that you need to form an LLC first, and then apply for an EIN.
When you are ready, follow the steps below.
Visit the IRS website and follow these steps to apply:
- Begin Application Here
- click “Apply Online” and then click on “Begin Application”
- choose your entity type (most people choose LLC or sole proprietor)
- enter the number of members and the state the LLC resides in
- select the reason you are requesting an EIN (most pick started a new business or banking purposes)
- enter the owners contact info
- enter the LLC info including official name of the entity, date the entity was formed
HOW MUCH AN EIN COSTS:
FREE! FREE! FREE!
If you have to pull out your credit card, or if they ask you to pay during the process, you are on the wrong website!
It’s FREE to get an EIN and it only takes a few minutes.
I recommend doing it yourself. I did.
NOW THAT YOU HAVE YOUR EIN…
Go open a business bank account to keep your business money and personal money separate.
Then put together an operating agreement.
You got this! Take it one step at a time and keep asking questions!
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