There are lots of things that you need to know more about when you start a business. No longer are the days that you can file your yearly personal taxes and go about your business. Being a business owner is a fun experience but there is so much paperwork and red tape that is required. The best thing you can do is to consult with a professional tax accountant to be sure that you are in the best position to start. You also want to make sure you have all your ducks in a row so that you are not in trouble with the IRS or the business department. When it comes to business one area that can be stressful is the taxes and the tax accountability that you have. You want to make sure you know all about the needs and be sure to use a professional service from the start. One thing that some owners don’t realize is that they need to acquire an EIN number. Mecham Dicus & Company explains what an EIN number is and why you need to have one.
What is an EIN Number?
If you are a new business you likely need to have an EIN number that is issued to the business. This is called an EIN that stands for Employer Identification Number that is usually nine digits long and is unique for your business. It is also knows as a Business Tax ID. This is a government issued number that is given so that no one anywhere else in the United States will have it. This is similar to a person that is born that is given a social security number but for a business. The IRS is the government agency that will assign that number and the reason is because the number is used for tax purposes.
Do You Need an EIN Number?
There are lots of new small businesses that are not sure if they need to have an EIN number. They might be thinking that they are the only employee or that they only have a few people working a few hours a week. The fact is that any business should have an EIN number that is assigned to them. If you have no employees at all but your business is set up as a partnership or a corporation it needs to be given an EIN number. You want to be sure that you work on getting one right at the start of your business dealings.
What is an EIN Number Used For?
The EIN number is used like the social security number for the business. This means that any taxes that are filed for the business needs to be sent in using that number as well as any other name and address information. The EIN number is also used when you go to the bank to get a new business account set up. You also will be using this number when you have to hire new employees and when you have your payroll paid out and accounting done.