For US tax purposes, an EIN or Employment Identification Number is a unique 9-digit identifying the number for business to identify themselves in the eyes of the government. No matter how small or big your company is; when paying tax to the Internal Revenue Services (IRS) you should have an EIN. However, businesses owned by a single person can choose to pay their tax under their personal Social Security Number. A business that needs an EIN and does not feel comfortable using their Social Security Number can apply for EIN online to start their company and be sure they are safe the IRS.
You will need an EIN if your business is a corporation or partnership because multiple people own the company compared to a Sole Proprietorship, where the owner can use their Social Security Number. S-Corps, LLC, and C-Corps are required to have an EIN. Even non-profits like churches are also required to get a Tax ID number.
EIN VS Social Security Number Saftey
An EIN and Social Security Number do pretty much the same thing, they help the Government identify you or your business for tax purposes. For safety purposes, many people looking to start a business should apply for an EIN number so they don’t have to use their Social Security Number. As we all know, SSN is stolen every day. Credit card theft is when someone else uses your SSN to open fake bank accounts, apply for credit cards and something create false Government documentation. To protect yourself, your credit and your business, small business should look into applying for an EIN so they don’t have to give out their personal SSN.
For a small business that has an EIN instead of using your SSN, can be advantageous for you and also your clients. One you don’t have to give out your personal SSN to be used in business processes, you ensure that your SSN is kept private to avoid identity theft. You can use your business’ EIN tax ID since this is required to open a bank account for your business. The same can be said about your business permits and licenses you apply for. You can apply for EIN online to make it easier and simpler for you.
How Do I get an EIN?
If you don’t secure the EIN or use your SSN for your small business, you run into a problem with the federal government, state government, and IRS. The government can close your business, levy your companies earning and even go after your own personal bank accounts if you do not have an EIN and file taxes. For most small business owners filing for an EIN can be difficult. You can hire a tax filing company such as GovDocFiling.com to apply for EIN online. You can also apply via mail and by phone but both processes take more time. The time you can be spending on your business and helping it grow.
Consider using an EIN for your business tax purposes. This will make your life easier and make application for business credit cards and loans less of a hassle in the long run.