Recent changes to the tax code, which are being touted as some of the most significant changes to the code in 31 years, mean a significant reduction in big businesses’ tax rates, but what does it mean for small businesses? To small business owners’ delight, there are a few significant changes that equate to big wins for them as well. However, to benefit from said changes, business owners must first apply for EIN.
Many of the changes implemented in the 2018 tax reform bill heavily favor C corporations and larger entities. However, in an attempt to make things fair across the board, the IRS approved four changes that allow small business owners to do the following:
However, as stated above, in order for a business owner to be eligible for any of the aforementioned benefits, he or she must first obtain an EIN.
Whether you’re applying for sole proprietorship or to become a limited liability corporation, the EIN number application process is fairly easy and straightforward. You can apply online and for free via the IRS’s website or you can download the requisite form and send it via mail or fax. However, it is important to note that your business must be legally formed in order to obtain an EIN. Moreover, if a business fails to file a return or notice for three consecutive years, it will lose its tax-exempt status. When you submit your tax ID application, the IRS will assume that you are legally formed and will start the three-year clock from the date of application. Visit IRS.gov for more information regarding deductions and eligibility requirements.