Your entrepreneurial spirit may have just got you. And you are now ready with the budget and attitude to establish your own business. In fact, “be the boss for yourself,” so they say. But this path you are taking is not all about the honeyed stories.
What Is EIN?
Just like the social security numbers for citizens, EIN is an identification number for companies operating in the US. It is a nine-digit number issued by the IRS (Internal Revenue Service). Once a business obtains EIN, it is legal and protected by the law.
What Business Entities Are Eligible?
You may be a US citizen, but your business may not be legally in the same country as you do, especially in today’s trend of office-less work. In that case, you may not be eligible to have an EIN. But to make everything clear, please consult a business lawyer for this matter. Otherwise, sole proprietorships, partnerships, LLCs, corporations, government agencies, and non-profits are required to have EIN.
How to Apply for EIN
IRS has made an online EIN application possible. In the past, you would have to fill a form manually and wait for it to be processed for months. Today, everything is much faster and convenient. As a business owner, all you need is a stable Internet connection and a will to examine the details on the IRS website.
When Do You Need EIN?
Since EIN is issued by the IRS, you should have guessed that it is tied to tax filing. And that guess is correct! As soon as you need to pay federal tax and annual tax return, or to issue payroll to the employees, EIN is required. Therefore, you should consult a tax consultant before you apply for an EIN so that you won’t miss anything or make an error. It is a sensitive matter that can lead to unnecessary loss.
Can EIN be Cancelled?
Technically, it can be. But only the IRS can decide this, and it is very rare. Even if you file for bankruptcy, your company’s EIN will never be recycled for any reason. The only possible scenario for an EIN to be terminated is when the company never opens after the number has been issued, which is a very unlikely case. …