One question new entrepreneurs often ask themselves is whether or not they need an employer identification number (EIN). More often than not, it is only considered necessary to obtain an EIN if you plan on hiring employees to work for the business. What if an entrepreneur does not plan to hire immediately or in the near future? Then, they may wait to obtain an EIN until they are ready.
However, it is advised that entrepreneurs obtain an EIN sooner rather than later. EINs provide small business owners with benefits that extend beyond hiring employees. The filing process is also fairly straightforward and not as complex as some may imagine.
What’s an employer identification number? What do you need to do to obtain an EIN for your small business? Let’s take a closer look at what entrepreneurs should know about federal tax IDs.
Before we discuss how to obtain an EIN, it’s important that entrepreneurs understand what this asset does for small businesses.
An EIN is a nine-digit number issued by the IRS. It is able to identify and track employer tax accounts when you incorporate or form an LLC for your business. Think of an EIN as a corporate social security number (SSN). You are legally required to identify your small business with one of these federal tax IDs. EINs are less sensitive than SSNs, so many entrepreneurs choose to use it when filling out payroll reports and paying federal taxes.
An EIN does much more than allow you to hire employees for your small business. Here’s where else it benefits a business to obtain an EIN.
There are certain situations in which you may not need to file for a new EIN. These include the following.
Before you begin filing an EIN application, make sure you’re able to answer “yes” to the following questions. Otherwise, your business may not be eligible to obtain an EIN.
Entrepreneurs may use a few avenues in order to file for an EIN. You may submit the fully completed Form SS-4 through mail. Check in with the IRS to ensure you are mailing the application to the proper address. Small business owners may also submit their EIN applications via fax or obtain an EIN over the phone.
However, many entrepreneurs choose to file for an EIN online. A trusted third party online filing service, like MyCorporation, may assist you in completing an EIN application.
Filing an EIN with a third party online filing service is often preferred by entrepreneurs. The entire filing process generally takes no more than 15 minutes to do. You’re also working alongside a trusted, reliable professional that helps guide you through each step and answers questions. As an added bonus, you’ll receive your EIN a bit faster than you would if you filed an application through the mail or fax. The online confirmation arrives as soon as you have completed the application process with us!
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