While most businesses are required to have an Employer Identification Number, or EIN for short, there are some circumstances that do not require this type of tax ID for a business. An EIN is used by the Internal Revenue Service (IRS) to track various legal entities and their respective tax responsibilities. Legal entities are recognized as independent of their owner, and therefore require identification for federal tax purposes. However, some types of business are not legally separate from their owners, and do not require an EIN. Before you apply for an EIN online, you should be sure you need a tax ID number for your business.
Not all business entities are legal entities recognized independently of their owner. Such entities include sole proprietorships, and single-member LLCs without employees. In both of these cases, the owner of the business may elect to use their Social Security Number in lieu of an EIN or other tax ID when filing taxes.
Depending on the nature of the business and its intended business activities, these two types of business entities would not require an EIN application form. However, there are some distinct advantages to having an EIN number even if it’s not required.
EIN numbers allow a business owner to perform several essential tasks, which include opening accounts in the name of the business, hiring employees and establishing a payroll, as well as the ability to apply for local permits and special licenses.
The best way to obtain a tax ID is to apply for an EIN online. Once you get an EIN online, you can start using your new tax ID to grow your business.
Online applications are the fastest and easiest way to get an EIN number. Apply today and you can start using your new EIN the very next day.