You may be familiar with an Employer Identification Number (EIN) if you own a business. An EIN is a special nine-digit number given to your business organization by the IRS. If you intend to file federal tax returns, hire staff, or create a company bank account, you must obtain an EIN. The legality and application of an EIN, however, are issues that many business owners grapple with. We will respond to a few frequently asked questions about EINs in this article.
An EIN has no expiration date because it is perpetually valid. However, you might need to register for a new EIN if your company goes through significant changes, such changing its ownership or legal structure. Additionally, the IRS has the right to deactivate your EIN if you don’t use it for a predetermined amount of time. Even if you do not have any employees, you should frequently use your EIN to avoid deactivation.
You can use different Doing Business As (DBA) names under the same EIN, yes. A DBA is a name used to do business that differs from the company’s legal name. You would need to file a DBA if, for instance, your operating name is ABC Company but your legal business name is XYZ Corporation. As long as they are all linked to the same legal business company, you are allowed to file more than one DBA name under your EIN.
Therefore, as a Sole Proprietor, Should I Get an EIN? An EIN is not necessary for sole owners. For tax purposes, people can substitute their Social Security Number (SSN). However, as a sole proprietor, getting an EIN has advantages. For instance, getting an EIN now rather than later may be simpler if you intend to hire staff in the future. An EIN can also assist in keeping your personal and corporate finances separate, which can be advantageous for tax purposes. Can I Have More Than One EIN Number?
A business is typically only permitted to have one EIN. There are a few exceptions, though. For instance, you might need to register for a new EIN if your firm goes through significant changes like changing its ownership or legal structure. Additionally, you might need to get different EINs for each entity if you have several business companies that are unrelated to one another.
Nine digits make up an EIN number. The location of the firm is indicated by the first two numbers of the EIN. The last five digits are assigned sequentially, and the middle two digits indicate the type of business entity.
In conclusion, having an EIN is essential for operating a business. To make sure that your company remains in compliance with IRS laws, it is crucial to comprehend the validity and application of an EIN. A tax expert or the IRS should be consulted if you have any issues regarding acquiring or utilizing an EIN.
You can examine any prior tax returns or other paperwork you have received from the IRS to find your EIN number. You can also get your EIN number by calling the IRS Business and Specialty Tax Line at 1-800-829-4933.