Description
IRS Definition: An Employer Identification Number (EIN) is a unique identification number that is assigned to a business entity so that it can easily be identified by the Internal Revenue Service (IRS). It is commonly used by employers for the purpose of reporting taxes. The EIN is also known as a Federal Tax Identification Number.
WHO IS REQUIRED TO GET AN EIN:
Any type of business entity with employees (including sole proprietors)
BENEFITS:
- File business taxes and avoid penalties
- Prevent identity theft
- Add credibility as a freelancer or independent contractor
- Speed up business loan applications
- Open a business bank account
- Build trust with vendors
- Establish business credit
- Easily hire employees
- Get more options as an overseas entrepreneur
- Limit liability in the case of a lawsuit
- Keep your personal finances separate from your business
Drawbacks of not getting an EIN
- Social security number is at risk of identity theft
- Personal finances at risk in case of a lawsuit
- Personal credit is at risk due to business debt
- Can’t hire employees without an EIN
