In the United States and Employer Identification Number (or EIN) is the corporate version of a social security number. Also known as a FEIN or Federal Employer Identification Number (and sometimes known as a TIN when used for identification) it will be issued to anyone (and that included individuals) who has to pay employees withholding taxes.
The EIN is a nine digit number assigned by the IRS and used by business entities, government agencies, trusts and estates, partnerships, non-profit organizations, sole proprietors and employers. The IRS uses the EIN number to record those taxpayers who need to file a number of different tax returns for their businesses. Those individuals who are classed as employers can opt to either use their social security number or obtain an EIN when it comes to reporting taxes withheld for their employees. Credit bureaus and credit issuers are able to tell the difference between SSN and EIN numbers, contrary to popular belief.
Employer Identification Numbers were created by the IRS in 1974 in order to 'require taxpayer identification for the purpose of payment of employment taxes.' The relevant provision was first adopted as part of the Tax Code Revision in 1954 and then broadened in 1961. It was agreed that the EIN would take the form 00-0000000 whilst Social Security Numbers are written as form 000-00-0000. Thus it is easy to differentiate between the two. Similarly, there are now EIN decoders on the internet that can detect which state a company has been registered in, simply by typing in the EIN.
Businesses need Employer Identification Numbers to be able to pay their employees and to be able to file business tax returns. It is essential to obtain a Employer Identification Number if the business is to be considered a LLC, Partnership, Corporation or S Corporation or a Non-Profit. Any business that does not obtain an Employer Identification Number will be classed as a proprietorship and the Operator or Owner's Social Security Number will be used on any relevant tax documents.
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Steps To Form An LLC
State-by-state variations in LLC regulations make it crucial that you are familiar with the legislation of your particular state before moving forward. It essentially boils down to these five fundamental steps:
Choose a Name for Your LLC
Select a Registered Agent
File the Certificate of Formation/Articles of Organization
Hire an Operating Agent
Apply for the EIN
In the United States, a limited liability company (LLC) is a type of corporate structure that shields its owners from being held personally liable for the obligations of the firm. It ensures liability protection and differentiates a business entity from an individual. Creating a limited liability company could seem difficult and overwhelming, but if you know how it operates, it can actually be rather simple. We break everything down in our thorough guide to forming your own LLC. So, you may comprehend everything there is to know about how to begin an LLC and proceed as quickly and successfully as possible.
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