Who Needs an EIN? There are a variety of uses for EINs. Common uses include the following: Corporations — As a corporation is legally a separate entity and responsible for its own obligations and debts, it needs its own EIN. Partnerships — By definition, a partnership involves two or more partners joining together for a business venture.
Most partnerships require EINs, except certain joint undertakings for the sole purpose of sharing expenses. Existing partnerships may need to apply for and obtain new EINs when one partner takes over and establishes a sole proprietorship, if the partnership decides to incorporate, or if the existing partnership is dissolved and a new partnership is formed.
If there are two or more members owners , the business can choose to be recognized as either a partnership or a corporation, but it still must obtain its own EIN. The owner of a single-member LLC may not need to obtain an EIN unless the business has one or more employees or the business is declaring bankruptcy. Sole proprietorships — Most sole proprietors do not need to obtain EINs for their businesses; however, they may choose to do so, as discussed more fully below. Trusts — Trustees or other fiduciaries may need to apply for EINs for certain types of trusts.
Irrevocable trusts, including testamentary trusts, need their own EINs because they are separate, legal entities once created and funded. Estates of deceased persons — When someone dies, their estate may need an EIN. Obtaining an EIN allows you to avoid having to provide your Social Security number to clients and other members of the public.
Using an EIN on your tax returns and payments also helps to show that you're an independent businessperson—in other words, an independent contractor and not an employee.
This can make you more attractive to prospective clients. Obtaining an EIN is easy and free. The fastest and easiest way is to apply directly at the IRS website. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.
Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. For one, it provides you with extra security against ID theft for your own social security number.
It also makes it easier to separate your personal and business credit history. If you wonder, how to get a tax ID number , know it is simple to apply for one online through an easy application. If you have a small home business with no employees and you are a sole proprietorship or a disregarded entity LLC, then you do not have to have an EIN. However, you might find that it benefits you to have one. EINs are used for more than just filing taxes; they are often required for:.
Additionally, having an EIN provides you with a certain amount of protection. While an EIN is primarily issued to corporations, nonprofits, LLCs, and other forms of businesses, an individual can also obtain it. EINs and Social Security Numbers serve the same purpose; they are used for filing taxes and applying for credit. It is possible to obtain one instantly when you apply through the IRS website by following these steps:.
A Social Security Number is a useful tool for compiling an individual's credit history because every US consumer has one.
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