Most businesses will need to get an Employer Identification Number (EIN) shortly after forming their LLC, LLP or corporation. An EIN is essentially the Social Security number for your business. If your business will have employees, you are legally required to have an EIN. Here are some things the EIN will enable you to do:
- Withhold taxes from your employee's wages.
- Shield your personal finances from liability for business debts.
- Shield your business finances from your personal liabilities.
- Develop a credit history for your business.
It is relatively simple to get an EIN. A business’s EIN is issued by the IRS and you can register for yours by clicking on this link for the IRS EIN registration page. The IRS also has some useful FAQs about EINs which you can read here.
Questions to Prepare Before Filling out the EIN Application
In filling out your EIN application, the IRS will ask for the legal structure of your business (e.g., sole proprietor, partnership, LLC, etc.). For help in creating your legal structure please see our articles "How to Form an LLC,” “How to form an LLP,” “How to Form a Corporation” and our free eBook “Basics of Incorporation.” Forming your legal structure is relatively easy, although choosing what legal structure is right for your business can be a bit more complicated. If necessary, please contact our office for a free initial consultation for any advice or assistance:
The IRS website will also want to know how many members are in your company. For the purpose of this application, a member is defined by one of the following:
- An individual who belongs to an organization, association, firm, partnership, company, or corporation.
- One of the persons who compose a social group (especially individuals who have joined and participate in a group organization).
- The owners of an LLC are called members and are similar in some respects to shareholders of a corporation. A member can be a natural person, a corporation, a partnership or another legal association or entity.
The IRS will also require the address where mail should be sent to the organization. Here are some other things you will need to know before applying:
- Address where business correspondence will be received.
- Legal name of the organization.
- Trade name (if different from the legal name).
- County where the LLC is located.
- State/Territory where the LLC is located.
- State/Territory where the articles of organization are or will be filed.
NOTE: the Articles of Organization are the written instrument by which the organization was created. Again see “How to Form an LLC,” “How to Form an LLP,” “How to Form a Corporation” and our free eBook “Basics of Incorporation” for more information about these documents.
- Month and year when the organization began doing business.
- Category of your business (e.g. hospitality, retail, manufacturing, etc.).
After completing your EIN application, the IRS will either issue your EIN as a PDF document immediately or mail it to you at your request.
Now that you have formed your organization and received your EIN, the next step will likely be to acquire a business license and possibly also a seller’s permit. More information about these items will appear in upcoming blog posts.