You need an Employer Identification Number, or EIN, to legally perform most of the principal functions of your business:
The good news is that it’s easy to apply for an EIN. In fact, when you fill out an EIN application online, you often receive your new tax ID number within 24 hours*. Once you have the EIN, you can open your business immediately.
*Most EINs are processed same or next business day, unless bundled with state formations, processing times will vary.
Besides being a legal requirement for all tax-related business operations – with significant penalties if ignored – your EIN is also necessary to protect yourself from liability. For example, forming a C corporation gives you the advantage of personal protection in the event of loss or lawsuits; legally, the corporation is a distinct entity, even if you operate it yourself.
To enjoy these legal liability protections, it’s essential to make all purchases and transactions using your company’s EIN number, not your own social security number. If you use your own savings account to fund business purchases, you can lose liability protection.
While applying for an EIN is fast and easy, and should definitely be near the top of your business checklist, there are other important planning steps that you can start beforehand:
Once you have a mailing address and a business name, you’re ready to apply for tax ID number and take your business to the next level.
A tax ID number opens up a world of possibilities for your business. Many sole proprietors who aren’t required to obtain an EIN still apply for one because of the legal advantages. Contact our helpful experts for important EIN information and effortless application help.