Question: Does My New Business Need an Employer ID Number (EIN)?
An Employer ID Number (EIN) serves as an identifier for business tax purposes. Most businesses need an EIN, but some may not. Here is a checklist to help you determine if you need an EIN for your new business:
Answer:
The most common reasons your business needs an EIN, according to the IRS:
Sole proprietor businesses
If you are forming a sole proprietorship with no employees, you probably do not need to apply for an EIN; you can use your Social Security number as your business taxpayer ID. You will be filing your business income taxes with your personal tax return, so there may not need to be a separate tax identifier.
Other reasons why your business might need an EIN
Even if your business does not fall into any of the categories above, you may still be required to get an EIN if you open a business checking account or apply for a loan from a bank or through the SBA.
Do I Need an EIN for a qualified joint venture (a specific type of husband-wife business)?
In general, spouses do NOT need an Employer Identification Number (EIN) for the qualified joint venture.
Spouses electing qualified joint venture status are treated as sole proprietors for Federal tax purposes. If you already have a husband-wife partnership with an EIN, retain the partnership EIN in case you lose your qualified joint venture status.
The IRS says that if your single-member LLC “has or intends to have employees, the EIN rules are different. If there is or will be employment tax reporting, both the single member owner and the SMLLC will need an EIN (two EIN’s).”
Review this IRS checklist for more details on circumstances in which you need an EIN for your business.
Back to All About Employer ID Numbers (EIN)
An Employer ID Number (EIN) serves as an identifier for business tax purposes. Most businesses need an EIN, but some may not. Here is a checklist to help you determine if you need an EIN for your new business:
Answer:
The most common reasons your business needs an EIN, according to the IRS:
- If you have employees
- If your business is taxed as a corporation or partnership (including limited liability company type)
- If you file employment taxes; excise taxes; or alcohol, tobacco, or firearm tax returns
- If you withhold taxes on income paid to a non-resident alien
- If your business has a Keogh plan, or
- If you are involved with trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers' cooperatives, employee plans.
Sole proprietor businesses
If you are forming a sole proprietorship with no employees, you probably do not need to apply for an EIN; you can use your Social Security number as your business taxpayer ID. You will be filing your business income taxes with your personal tax return, so there may not need to be a separate tax identifier.
Other reasons why your business might need an EIN
Even if your business does not fall into any of the categories above, you may still be required to get an EIN if you open a business checking account or apply for a loan from a bank or through the SBA.
Do I Need an EIN for a qualified joint venture (a specific type of husband-wife business)?
In general, spouses do NOT need an Employer Identification Number (EIN) for the qualified joint venture.
Spouses electing qualified joint venture status are treated as sole proprietors for Federal tax purposes. If you already have a husband-wife partnership with an EIN, retain the partnership EIN in case you lose your qualified joint venture status.
The IRS says that if your single-member LLC “has or intends to have employees, the EIN rules are different. If there is or will be employment tax reporting, both the single member owner and the SMLLC will need an EIN (two EIN’s).”
Review this IRS checklist for more details on circumstances in which you need an EIN for your business.
Back to All About Employer ID Numbers (EIN)
SHARE
