Employer Identification Number (EIN)
The employer identification number (EIN) is an IRS-issued nine-digit code for identifying a corporate entity. When you have registered for an EIN, this Federal Tax ID can be used to legally recognize your company. You can also continue to use your SSN.
How Could EINs be used by company owners?
To entrepreneurs the advantages of an EIN are many. Here are some of the advantages of getting (or using) it to identify the company.
- Opening a corporate bank account: Many U.S. financial firms need an EIN before opening a commercial bank account.
- Making an LLC and recruiting employees: The IRS is informing LLCs to file an EIN. What is all that for? When an LLC has or plans to recruit staff, they are supposed to have an EIN. What happens if you do not intend to hire employees or have them recruited? After the incorporation of the company, you will be technically recognized as an employee. Then you must have an EIN so that your company can be regulated by the IRS to ensure that it complies.
- For instance, if your company entity changes from a single-member LLC to a member-managed LLC, you ‘d have to fill out Form 8832 Entity Category Election if you want to switch your organization type. It helps the company to maintain its EIN even if the classification in federal taxation has changed.
- When you plan to set up business credit: The business credit would vary from your credit — it is centered, along with other things, on the past of your company spending and seller relationships.
- Setting up pension plans, profit share plans, and retirement plans: When you want to build such initiatives, you will be called an agent of the scheme and will require an EIN.
- Filing taxes on employment, prohibition, alcohol, cigarettes, or firearms.
Where to Get EIN
You can register for an EIN at no charge online, by email, fax and by phone via the IRS. All EIN applicants must report the actual principal officer, general contractor, grantor, beneficiary, or trustee ‘s name and taxpayer identification number (SSN or ITIN). To register online, please visit the application page on the IRS website. The details will be checked during the online session after the application is done, and an EIN will be released immediately. It takes four weeks to submit via mail while it takes four days to file a fax.
Social Security Number (SSN)
A nine-digit code that is given to American people and legal residents of the United States is called Social Security Number (SSN). The U.S. government will use the amount throughout one’s lifespan to monitor your income and years of employment. When you’re able to retire, the U.S. government can use this figure to calculate the number of social security payments you are getting.
Initially created in 1936 social security numbers and cards given to their owners in 1972. In later years further steps will be taken to discourage modification and forgery of the passport. It was
specified in 1983, according to Section 205(c)(2)(G) of the Social Security Act (SSA), that social security cards should be made with currency notes paper and can not be faked.
SSNs encrypt a large amount of your data. They are equally vulnerable to future identity fraud as well. It is necessary to properly protect this number, or recommend having another, less vulnerable federal ID as an additional measure.
What SSNs would company owners can use for?
When you owned a small company, the SSN is important in being recruited for job vacancies or even getting a driving license. As a small businessman, what would you use a social security number for?
- Opening bank accounts: It is a necessity at US financial institutions for both corporate and personal bank accounts. You may also use an EIN to open a bank account for the company.
- Public loan applications: Many businessmen are pursuing federal loans to finance extra-small businesses. This number is used to administer a background check and to decide whether you apply for a federal loan.
- Filing annual tax returns: Using an SSN or an EIN while filing the tax returns for your company.
Where to Get SSN
To get an SSN, you’ll need to submit Form SS-5, Social Security Card Application. Type SS-5 can also be accessed by calling 1-800-772-1213 or contacting the nearest Office of Social Security. To obtain an SSN, you will have evidence of your name, age, and U.S. citizenship or status as a legal immigrant. Applying for an SSN is free.