When someone is starting a small business, this is one of the questions that always comes up. What is an EIN? It stands for Employer Identification Number. The name makes it seem pretty simple. If you are an employer (i.e., your company has employees), then you need it. However, there are also other situations in which you need an EIN, even if you have zero employees. Here are a few of those circumstances:

  • Your business operates as a partnership or a corporation – Only a sole proprietor can get away with not having an EIN, even if you have no employees.
  • You have to file an employment, excise, or alcohol, tobacco, and firearms tax return – If your small business falls into any of these categories, you need an EIN, even if you are a sole proprietor with zero employees.
  • You have a Keogh plan – This is a pension plan that defers taxes that is available to self-employed persons. If you have one, you also need an EIN.

Of course, even if you don’t fit into any of these categories now, you may make adjustments to your business that require you to get an EIN later, so some small business owners decide to go ahead and apply for one now, even if it isn’t necessary at the moment.

The Support that Small Businesses Need in California

From business formation to contracts and agreements to protecting your intellectual property, Pokala Law APC has the services your small business needs. Call our San Diego office today at 1.844.695.1487 to learn what we can do to help your small business succeed.