As a new business owner, it is important to get an EIN for many different reasons. However, not all business structures need a EIN and it only applies to business structures that are looking to hire employees and for tax purposes. Examples are: LLC multi members, Partnerships, Sole proprietors who hire employees and, non profit organisations and corporations.
A EIN stands for Employment Identification Number, which acts as a business ID and is government issued. You can obtain it for free on the IRS website, with a IRS EIN assistant helping you through the online application procedure. It has to be applied after you have formed your business and not beforehand. Think of your EIN being your Tax ID number and can provide you many purposes for your business. In this article we will list the 7 benefits of getting an EIN for a business owner.
A great benefit about obtaining an EIN is that you get to open a separate business bank account. This gives you the opportunity to protect your personal assets and separate them from your professional assets. This means that if your business ever faces any potential lawsuits or losses, it will only affect what’s in your business bank account and not your personal one.
Another added bonus to that is that you get to manage and maintain your professional finances for your business; which means that you can keep track of the cash flow and how it’s spent.
By obtaining an EIN you have the legal ability of being able to hire employees for your company. Without an EIN, you cannot hire employees. This is of course a benefit for you business that cannot be dismissed or avoided, since large corporation companies and LLC companies are especially in need of hiring employees.
Maintain your corporate veil as an LLC company
As an LLC member of a company, you can benefit majorly by having an EIN for your business. It can help contribute towards protecting you from personal liability for the business’s debts. It can also offer the professional credit needed for your reputation as a company, because it allows your own business to have a separate identity from its owners.
Prevent identity theft
If you have an EIN, you are also preventing identity theft for your company. The reason for this is because your Social Security Number will have an official level of privacy. Not only that but, if you have your personal and professional assets in separate bank accounts, you are giving the hackers less of a chance to be able to break in.
It is free
As we stated above, getting an EIN is free, which is of course an advantage for your company since you can indulge in all of the benefits without having to pay a cent. You simply have to fill out a procedure online, state your legal business name that’s already registered and the date that you registered your business and that’s it. An IRS EIN assistant is there to help you every step of the day and there is further information about applying online.
A EIN can be for everyone
Foreigners who are not U.S. citizens are able to also obtain an EIN. Instead, you just download and fill out the IRS Form SS-4 and submit your application to the IRS. The section for 7b can also be left blank, so you do not need to worry about filling that in.
You can search up other businesses
If you are a company that handles other business clients and you may need their Tax ID number for business purposes, you can actually search up other business’s EIN numbers on a database that is accessible, which is called Security and Exchange Commission. You can only do this if you have an EIN yourself, which is why it can be beneficial for you to obtain one.