Many of us are not into business and we do not know what is involved in the setting up of a new business. Some business owners never had the experience of starting a new business because their business could have been a business passed down to them from their father. It is only those who had personally went through the process of setting up their business and going through all the legal proceedings know what is it like to set up even a small scale business.
Whatever business it is that you want to set up, you will have to apply for a Federal Tax Identification Number with the Internal Revenue Service or the IRS. The IRS will assign a nine-digit number which is for the purpose of identifying your company. You can apply for EIN by visiting IRS website to complete an online form. The application is free and can be done through online, fax or mail. The process is fast and easy.
Before you apply, make sure to get ready details such as the name and taxpayer’s ID number of the business owner, and details concerning the company’s principal officer, owners, general partners, and etc. Once the Federal tax id number is assigned by IRS to the registered business, it will never be cancelled.
If you are still unsure whether you really need to apply for the tax id, check out the following. You will be required to apply for FEIN if the following is true.
• You are employing workers to work in your company
• You have registered your company as a corporation
• You are withholding taxes on income other than wages
• You have business dealings with organizations listed with IRS
In order to apply for the tax id number with IRS, you will need to know your business entity in order to fill the application form. If you are not sure, it will be good to confirm because it will determine many things such as how much you will be taxed on the profits. It will also affect how your company will be treated in the lawsuit if there is a lawsuit against your company, plus the type of bank account you will be able to open to handle your company’s finances.