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What is an EIN and does your business need one?

An Employer Identification Number (EIN) is relatively easy to obtain and a useful, sometimes mandatory, tool when starting a new business or considering a side business. An Employer Identification Number (EIN) is mandatory for some businesses and optional for others. But in general, an EIN is necessary for independent contractors and small business owners.

Who is required to have an EIN?

The following business structures are required to have EINs: Corporations Partnerships Limited Liability Companies (LLCs) Sole proprietorships, in general, are not required to have an EIN. However, an EIN is required if: You have employees or plan to hire them.

Why can't I just use my Social Security number?

When the IRS mandates an EIN, you don't have a choice. But here's a key reason why it's a good idea to use an EIN for business even when it's not required: avoiding identity theft. An EIN helps keep your personal and business finances separate. It reserves your Social Security Number for personal needs and keeps identity thieves from ripping off your personal assets.

What other advantages come with having an EIN?

In some ways, an EIN is one of the best-kept secrets in the business world. Surprisingly, applying for one isn't on every entrepreneur's to-do list. An EIN makes it easier to: Apply for a Business License This varies by state, but many states require an EIN before you can be licensed to conduct business.

What's the difference between an EIN and a FEIN?

A FEIN is a Federal Employee Identification Number. It serves the same purpose as an EIN, except the federal government issues it instead of the state. A FEIN also allows you to enroll in the electronic federal tax payment system, where you can easily make tax payments over the phone or online. Business Filing Solutions can assist you in Securing an EIN today.