If you have a business located in the United States or in any of the US territories, then you will require a tax ID number for your business entity and may apply for one. Most of time, for tax ID filing, business owners apply online as the processes involved are much easier this way and if you decide on that then you will have to have Taxpayer Identification Number like SSN, ITIN, EIN that is valid and you can only have one EIN or Employee Identification Number per party for your business. With a tax ID number you can do various things for your business and they are all listed below:
- If you have a tax ID number, it can be used to open a bank account for your business.
- You can also apply for a credit card in the name of your company with a valid tax ID.
- On quite a few occasions, when you have to file for some kind of a business permit you will have to provide your tax ID number.
- Furnish independent of individual service providers a form 1099.
How to Get a Tax ID Number for Your Business
Many business owners might think that involves a lot of hassle but if you do it online, with the help of any online agency that specializes in this, and then you will find that the process is not as complicated as it might appear. The online agency will take care of all other details while you focus on running your business and will do their best to speed up the process, helping to get your business on the right track.
Your tax ID or Employee Identification Number (EIN) helps to identify what kind of business you are running and to understand any information regarding the business and the way it functions, and therefore it is absolutely essential for your business entity to have one.
Other that identifying your business identity, the tax ID number also identifies additional entities like Trust or Estate that might be associated with your business. To understand better, it easily be said that this tax ID number is to your business entity exactly what your social security number is to you!
Given below are three, very simple steps that are required to be followed when you apply for a tax ID number :
- Firstly, you will have to select the entity type for your business. Your business entity will usually be something like sole proprietor or an individual, limited liability company, non-profit organization, corporation, s-corporation, church controlled organization, personal service corporation, estate of a deceased individual or a partnership. Now, you might not be very sure of what your business entity is but the online agency that you will be using will possibly provide good information regarding the aforementioned entities and this will make things far easier. You can also take a survey which will help you analyse the business and decide on what entity should be selected or simply go through the aspects of your business to understand better what entity suits your business the best.
- Once you have selected your business entity, make sure that you fill out an application form. These application forms are quite simple and they will require certain personal details and some information regarding your business which includes name, start date, relevant details, and also some personal details regarding yourself and how you conduct business.
- All other details are taken care of by the online agency which acts very much like a third party for your business and once they take care of all details, you will receive the tax ID number via email.
Some private companies often want to turn their business into a limited liability company which combines together the pass through taxation usually of an individual proprietor or also a partnership with the limited liability of the corporation.
Now, forming an LLC involves several steps like getting a unique name for the company, acquiring an LLC operating agreement, making sure that the LLC has a responsible statutory agent, obtaining a certificate after registration of the business as an LLC and also filling out a tax form. If you form a limited liability company, then you get the following perks:
- There will be no taxation at corporate level.
- You can be assured that all of your personal assets will be protected.
- Ability to restructure the business in a way that will suit your needs.
No matter what kind of a company or business one has, a tax ID number is of utmost requirement and it is involved in running a business successfully and without any problems.
Check out how to start an llc from Money Brighter.