Although it can be a thrilling experience, starting a business also entails navigating numerous legal and administrative procedures. Getting an EIN number is one of the most crucial things you must do when starting a business. The Internal Revenue Service (IRS) issues firms with an EIN number, commonly referred to as an Employer Identification Number, which is a special 9-digit tax identification number used for tax purposes. We’ll go over how to get a free EIN number in this article and address some associated queries.
The good news is that obtaining an EIN number is a really easy and uncomplicated procedure. Using the IRS website to submit an online application is the quickest and most popular way to get an EIN number. Your EIN number will be sent to you right away when you submit the free online application.
The legal name of your business, the type of business entity you have (such as a sole proprietorship, partnership, LLC, or corporation), the address of your business, and the name and social security number of the business owner or other responsible party must all be provided when applying for an EIN number online. The IRS will examine your application after you’ve submitted it and give your company an EIN number.
You might be curious about the price if you’re beginning a business in Illinois and are thinking about incorporating an LLC. The price of forming an LLC in Illinois is determined by a number of elements, including filing costs, the price of acquiring any necessary licenses or permits, and the price of employing an attorney or accountant to assist you in the process.
The filing cost to create an LLC in Illinois is $150. Additional fees could also be required for services like name reservations or expedited processing. In addition, the cost of obtaining licenses or permissions from the state or local government may increase depending on the nature of your firm.
You may own more than one business as a sole owner or use various trade names. You could be wondering how many EINs you require in this situation. The answer is that, even if you operate many firms, you just need one EIN number.
Because your EIN number and social security number are connected, all of your businesses—regardless of how many you operate—are included in your personal tax return. As a result, you only need one EIN number to file your tax returns and declare your income for all of your enterprises.
For tax reasons, your firm is identified by an EIN number, which is a tax identification number. The IRS assigns it, and most firms, including LLCs, are required to have one. On the other hand, an LLC is a type of legal structure meant to preserve the firm owner’s personal assets and offer certain tax advantages.
In other words, an LLC is a legal entity for conducting business, whereas an EIN number is a tool for tax compliance. Although forming an LLC is not necessary in order to apply for an EIN number, it is highly advised because it can protect your personal assets and make tax reporting easier.
You will often require an EIN number for your firm. You might be able to avoid using an EIN number if you are a sole proprietorship without any workers and do not intend to add any in the future. However, you will require an EIN number if you intend to recruit staff or create a legal business entity, such as an LLC.
In conclusion, getting an EIN number is an important step in beginning a business, and the good news is that the procedure is free and simple. Additionally, you should budget an additional $150 for filing fees if you are forming an LLC in Illinois. Even if you run many firms, you just need one EIN number if you’re a sole proprietor. An LLC is a legal framework that can safeguard your personal assets and facilitate tax reporting, whereas an EIN number is a tool for tax compliance.
No, a state’s EIN and the federal EIN (Employer Identification Number) are not the same. The State EIN is issued by the state’s taxing body for state tax purposes, but the Federal EIN is issued by the IRS to identify a business organization for tax purposes. While some jurisdictions require firms to have both a federal and state EIN, others do not. If a State EIN is necessary for your business, it is crucial to confirm with your state’s revenue authority.
Your EIN will continue to be active and accessible if you don’t utilize it. It’s crucial to keep in mind that if you have an EIN, the IRS will expect you to file tax returns even if you have no revenue to report. Penalties and future legal problems may ensue from failure to file. Therefore, it is best to formally deactivate your EIN with the IRS if you no longer need it.