The 411 on EINs: Why Your Business Needs One (and How to Get It!)
If you have a business, whether it’s a corporation or a sole proprietorship or something in between, you probably
need a Federal Employer Identification Number. While not every business entity is legally obligated to have an EIN,
having one can make business setup and administrative tasks much easier, along with many other benefits. What’s
more, obtaining an EIN is fast, simple, and free, so there’s no reason not to get one. Trilink offers the specifics
Which Businesses Need EINs?
An EIN is a unique nine-digit number that’s used to identify your business on tax forms, banking statements, credit
accounts, and more. Think of it as a Social Security number, but for businesses. Legally speaking, your business is
required to have an EIN if it’s registered as a corporation or as a multi-member limited liability corporation.
EINs aren’t mandatory for single-member LLCs and sole proprietorships, because those entities allow you to use
your Social Security number instead. However, even if your business is a sole proprietorship or a single-member
LLC, you’re required to have an EIN if:
● Your business is taxed as a corporation. ● Your business has many employees.
● Your business has a solo 401(k) or Keogh retirement plan.
● You bought or inherited the business.
What Are the Benefits of an EIN?
Even if the government doesn’t require you to have an EIN, you may find that you need one from a practical
standpoint for your business to function. For example, most banks, lenders, and vendors require an EIN to open a business checking, credit, or trade account. Your state or local government may also require you to have an EIN to obtain necessary local business licenses or permits or to set up business tax accounts.
One of the most important benefits of an EIN is to protect your identity. Even if you don’t hire employees, you’ll
likely need to send out 1099s or other tax forms to independent contractors and suppliers. Without an EIN, you’ll
have to disclose your personal SSN to everyone you do business with…and potentially everyone they do business
with. This is an increasingly important concern, as recent research suggests business identity theft is on the rise.
How Does a Business Get an EIN?
First, you need to find out how to start an S corp, at least, to get an EIN. EINs are assigned by the Internal Revenue
Service. You can apply online through the IRS’s website, or by mail or fax. To apply, you need the business name
and address and the business start date, along with your contact information and your SSN. The process is free and
takes about 10 minutes. The IRS usually issues your EIN immediately.
How Long Does an EIN Last?
An EIN assignment is typically permanent. If your business changes its address, state residence, or even its name,
you’ll still keep the same EIN. However, if your business is registered as a corporation, there are some situations in
which you must apply for a new EIN. You’ll need a new EIN if your corporation:
● Gets a new charter from your Secretary of State
● Changes to a sole proprietorship or a partnership
● Becomes a subsidiary of a different corporation
● Goes through a statutory merger that results in a new corporation being formed
Not every business is required to obtain an EIN, but it’s usually a good idea. An EIN is easy to get, protects your
identity, and makes it easier to operate your business.
Looking to stay in control of your business finances? Learn more about Trilink’s services.