top of page
Writer's pictureLaToya Bines

All About Those Taxes

Updated: Sep 19, 2023


August, 22, 2023

By: LaToya Bines


Starting a new business is exciting! There’s nothing to it. All you have to do is create a business name, website, and social media accounts, right?


If only it was that simple. While these things are important, and they have their place; just having a name and telling others is not what makes a business. You must first register your business with the government (federal, state, and sometimes county). Does starting a business still seem exciting? Probably not, it may seem a bit scary, but as it is in business and in life, we must conquer our fears.


What is an EIN?


All businesses, small or large, need to have a Taxpayer Identification Number. This number comes in the form of the Social Security Number (SSN), the Individual Taxpayer Identification Number (ITIN), or the Employer Identification Number (EIN). The EIN is issued by the Internal Revenue Service (IRS) for the purposes of tax administration. Many people describe it as the Social Security Number for your business because the SSN identifies a person, and the EIN identifies a business.


Do I need an EIN?


Self-employed individuals who file as a sole proprietor and have no employees may choose to use their SSN for business purposes instead of an EIN; however, a sole proprietor who plans to have employees should have an EIN. Business owners who have a Limited Liability Company (LLC), any partnership, or corporation will need an EIN. Charities and other tax-exempt organizations are not excluded from this requirement. They must also have an EIN. The EIN is needed to apply for tax-exempt status and file returns.


Having an EIN is part of the process of having a legitimate business. Your EIN is required to open a business account with a financial institution; and it may be requested when obtaining licenses, or when applying for grants, but obtaining your EIN may not be a one-time deal. If you decide to change ownership or business structure you may have to get a new EIN.


How do I obtain my EIN?


To receive your EIN, you must do so with the IRS. You may apply for your EIN online, by mail, or by telephone. If you apply online for your EIN, you will receive it immediately. Applying for your EIN by mail or by phone may take weeks or even months to receive. When you have your EIN put it in a safe place and only use it as it was intended, for tax purposes.


For more information about obtaining your EIN, visit the IRS website at https://www.irs.gov/ and search for EIN.

Comments


bottom of page