When starting a new enterprise, it’s imperative that you understand all of the legal capabilities of your fledgling company. One of the priorities of your business should be obtaining an employer ID number. This Tax ID granted by the IRS offers a lot of different benefits for your company. As such, filling out an EIN application should be one of the first things you do. Let’s see what it can offer for your enterprise.
Unless you are a sole proprietorship, then odds are that you will want to hire people to help you run your business. However, you won’t be able to do that (legally) without an employer ID number. Since you can’t link employees to your social security number, this ID ensures that they are tied to a separate business entity.
Opening a Merchant Account
Most banks will not allow you to open a new bank account for your company without an EIN. This is because they want to make sure that your finances are handled separately. Also, having a business means that you can have a better credit score than if you were trying to open the account with your SSN.
Forming a Corporation
In addition to sole proprietorships, LLCs may not need an EIN to operate. However, if you are registering as a corporation (or a partnership), you must have this ID number to make it legal. This is because you are forming a separate entity already, so the IRS requires that it have its own Tax ID.
How to Get an EIN
Thankfully, the process for obtaining this number is simple and straightforward. Just download the form from, fill it out, and submit it online.. Usually, you can check TIN number status (and EIN) within a day or so.
Since getting an EIN is so simple, you should apply, regardless of your business type. This will allow you to keep your personal and professional finances separate, and it provides extra flexibility in the long term.