If you’re a sole proprietor whose business doesn’t have any employees, chances are that you aren’t required to fill out a tax ID application. There are some great benefits if you do, however:
• Simplified accounting
• Solid business credit history
• Increased liability protection for your LLC
• Ability to open a business bank account
• Added identity theft protection
By separating your business financial records from your personal finances, your company can grow independently of your private bank account or credit history. Apply for EIN for protection in both directions: lawsuits against your LLC don’t touch your personal finances, and your own credit report doesn’t keep your business from getting needed loans.
Some sole proprietors use their social security number extensively on their business tax forms. They may also provide this information to banks, suppliers and other companies they interact with. Every time you use your SSN, you risk increased probabilities of suffering identity theft or fraud. By taking care of all necessary transactions with an EIN, your SSN stays safer.
As a sole entrepreneur, the legal benefits of limited liability are a plus. They keep business losses from affecting your personal bank account or your family. In order to convince a judge that your business is really a separate entity however, you have to show that you manage your business independently. Having an EIN – and keeping separate financial records – goes a long way towards establishing that.
Getting a different business EIN number for your company is really easy. All you need to do is fill out an online EIN number application and file it with the IRS. Approval only takes a few hours to a day or two. Here are the steps:
1. Check out the online form and download a copy.
2. Gather the necessary financial information about your business.
3. Fill out the form.
4. Submit the completed EIN application online.
You’ll have your new EIN in no time, allowing you to grow your business professionally, whether it’s a budding startup or an established name clients trust.