The Employer Identification Number (EIN) also known as a Federal tax ID is a necessity for everybody who has intended to start a business regardless its size and scope of operation. That is why it is of crucial important for any beginner to know what a Federal Tax ID is and how to use it related to annual statement for the IRS. Besides it is significant for stating in the framework of regulations of the government.
It is the same as the Social Security number for any US citizen, whereas the Employer Identification number is for business. Having a Federal Tax ID will bring you and your business a number of benefits.
Federal Tax ID Benefits
Especially small businesses enjoy a wide range of benefits with EIN. In case you own a business entity you will receive the following advantages by obtaining this tax identification number.
- Advantages Regarding Business Structure
- Of course, you can found a business without an EIN, but there are many opportunities out there that you will not be able to enjoy. For example, if your business lacks Employer Identification Number, you cannot create a corporation or partnership.
- Thus, you will be unable to enjoy the advantages of liability protection, pass-through taxation and more without a Federal Tax ID.
- Freedom to Hire Employees
- It goes without saying that you, as a sole entrepreneur dream about a company growing from a sole proprietorship to a big corporation with a lot of branches all over the world. Come and see that you will never be able to realize your dream without an Employer Identification Number. The case is that according to the law you are not allowed to hire employees without an EIN.
- Business Accounts
- Another advantage of obtaining an EIN or a Federal tax ID is that you will have an opportunity to create a business account and apply for business credits. Your application for a business account will be denied by the bank in case you don’t have this nine-digit magic number.
Thus we should state that he Employer Identification Number has a lot of benefits from a financial viewpoint. In case you want to have a flourishing business with its branches spread all over the world then you should obtain EIN. To obtain it easily and quickly you can turn to any online company providing similar services.