An EIN (Employer Identification Number) is a nine-digit identifier issued by the IRS (Internal Revenue Service) if first applied for. Many businesses obtain one to help with various tasks, similar to a Social Security Number. But when you’re first starting up a small business, do you need one straight away? The simple answer is that you don’t have to by law, but it is advisable to help you.
Having an EIN for your small business offers a wide range of advantages. The main one is that it helps establish your company as a separate legal entity, offering the added bonus of protecting your personal assets from business liabilities. It also helps you with various other business tasks that will allow you to expand, whether opening a dedicated bank account for your organization or hiring employees to work for you.
Obtaining an EIN early on may not be mandatory, but it can help start your business on the right foot, streamline the administrative process, and enhance your overall credibility.
Why you should get an EIN if you’ve just started a new small business
There are many advantages to obtaining an EIN early on in your small business career. Here are some things you should consider:
Separates your business and personal finances
Obtaining an EIN allows you to set up a separate business bank account for your new company. This will enable you to keep your personal finances separate from your business money, helping you with legal and tax purposes.
Professionalism and credibility
Customers sometimes check to see if your company has an EIN number, as it shows you’re more credible. Taking the initiative to obtain your EIN shows you’re serious about the growth of your new venture and want to remain professional.
Legal compliance
As we mentioned, it isn’t exactly mandatory for your small business to have an EIN when first setting up. Still, it can sometimes ensure you remain compliant with specific legal requirements. If you want a new business license or to fulfill tax obligations, this could be the case.
Facilitates hiring and growth
Not all small businesses want to hire employees, but if you do, having an EIN can help. If you plan to hire new workers or subcontractors, having an EIN number can simplify the entire process of paying them.
Summary
Starting a new business venture can be exciting, but you want to ensure everything is in place for success. While obtaining an EIN number isn’t a legal requirement, we recommend getting one so you can take advantage of the range of benefits it provides.
Lookup your EIN using EINsearch’s lookup service
Want to see if one of your businesses already has an EIN? Or if a business you are considering working with has one? You can easily find it by using EINsearch’s lookup service. Find the number you want in a few simple clicks.