Don’t Forget This Essential Step if You Are Starting a New Business
Starting a new business is a process that involves many steps, and one of the most important is getting an Employer Identification Number, or EIN.
Read on to learn more about this important step and to discover how to apply for an EIN.
What Is An Employer Identification Number?
An Employer Identification Number (EIN), also known as Federal Tax Identification Number, is used to identify employers for tax purposes, and most businesses need one. EINs have nine digits and are assigned by the Internal Revenue Service. If you already have an EIN and the organization or ownership of your business changes, then you may need a new number.
How to Know if I Need an EIN?
Finding out whether you need an EIN is a very simple process. Ask yourself the following six questions. If you answer “Yes” to any of them, then you need an EIN.
- Does your company has employees?
- Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
- Does your business operate as a corporation or partnership?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following types of organizations?
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Non-profit organizations
- Farmers’ cooperatives
- Plan administrators
How to Apply for an EIN?
You can apply for an EIN in a variety of ways, including by fax, mail, telephone (for international applicants), and online. The IRS offers this service for free and issues only one EIN per responsible party per day.
Keep This in Mind About EINs
Above all, an important fact to keep in mind about EINs is that you must make sure to keep your business mailing address, location, and responsible party up to date. EIN holders must report changes in the responsible party within 60 days. Therefore you must be diligent when any of these modifications take place.
Contact the Experts at JT Tax Services
If you are starting a new business and need help choosing the right structure, contact the experts at JT Tax Services today. We have the experience, the knowledge, and the drive to assist you. With our advice, you can file your taxes with the peace of mind that comes with knowing that you are limiting your liability while staying compliant with federal and state tax regulations.