Would I Need An EIN To Start A Business?

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For most people, creating a company from scratch seems like a daunting task. Many believe that to be successful, you need a lot of startup capital or expertise, but the fact is that if you have a money-making idea, you can get up and running much sooner than you think. That being said, there are a couple of crucial steps that come before you can open your doors (so to speak), including filing for an employer ID number. EIN and businesses go together like air and oxygen, which is to say that you can’t have one without the other. To further illustrate this point, let’s go over the basics of an EIN.

What is an EIN?

This is the tax ID number that is given to you by the IRS for filing purposes. Because your company is a separate entity from yourself (in many cases), you want to ensure that your taxes aren’t linked together. As such, an EIN is a critical part of starting a new business.

Sole Proprietorship

If you are planning on creating a company where you are the only person working for it, and you never plan on hiring anyone else, then this might be a good option for you. It is also easier to sign up because you can create the business using your own tax ID number, which is your social security number. This is the only case where you don’t have to get an EIN.

How to Get a Federal Tax ID

Since the number is coming from the IRS, an EIN can also be referred to as a federal tax ID number, so the two terms are interchangeable. Fortunately, the process is very simple as all you have to do is go online, fill out the paperwork and submit it along with any fees. Usually, you will get your number within an hour.

Overall, having an EIN is necessary when forming an LLC or any other kind of company to ensure that the business assets are separate from your own, as well as to allow you to hire any employees down the road. Simply put, you should get one ASAP.