Are you starting up a new business and wondering if you are going to need to get an Employer Identification Number for tax purposes? If so, there are a few factors to consider about your business structure, as these will have a bearing on whether the answer is yes or no.
An Employer Identification Number – A Must for Employers
The biggest factor is whether your company has any employees. If you need to withhold federal taxes in someone who does work for your company, it doesn’t matter if you are running a sole proprietorship or a corporation. It’s time to get an EIN.
Business Structure and EIN?
All businesses that are structured as either a partnership or a corporation require an EIN. Other business structures may not need to take this extra step. For example, a sole proprietor who has no employees can get away with just using a social security number instead of an EIN. While that may sound simpler, there are some tax and liability disadvantages associated with having one’s business and personal finances connected to the same social security number.
Sometimes changing your business structure can result in the need for a new EIN. For example, if a partnership incorporates, a new EIN is required. However, if your partnership simply decides to change the company name, you can still use the same EIN.
Getting Help with New Business Formation or Business Structure Changes
If you are starting up a new business or if your business structure is changing, the right business attorney can help you to navigate both federal and state regulations. Pokala Law specializes in helping small business to meet all of their business formation requirements, including determining whether you need an EIN and helping you to file the correct paperwork if you do. To learn more, call 844-695-1487 for a brief phone consultation.