Starting a business can be an exciting venture, but it also comes with a lot of responsibilities. One of these responsibilities is acquiring an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is a unique nine-digit number that identifies your business for tax purposes. Whether you are operating your business or not, having an EIN can be an essential part of ensuring compliance with the IRS.
To acquire an EIN, you can apply online, by phone, by mail, or by fax. The fastest and easiest way to apply is online through the IRS website. You will need to provide basic information about your business, such as its legal name, address, and type of business entity.
Once you have submitted your application, you will receive your EIN immediately.
It is important to note that acquiring an EIN comes with responsibilities. Even if you are not operating your business, you may still be required to file tax returns.
For example, if you have registered your business as a partnership or a corporation, you will be required to file an annual tax return, even if the business did not generate any income during the year. Failure to file a tax return can result in penalties and interest charges.
Additionally, having an EIN can make it easier to open a business bank account, apply for business credit, and hire employees. When you apply for a business loan or credit, lenders will often require you to provide your EIN.
Similarly, when you hire employees, you will need to provide them with your EIN so that they can fill out the necessary tax forms.
If you are no longer using your EIN, you can close the account by contacting the IRS. However, if you anticipate using the EIN in the future, it may be best to keep it open, even if you are not currently operating your business.
In summary, acquiring an EIN is an important part of starting a business, but it also comes with responsibilities. Even if you are not operating your business, you may still be required to file tax returns.
By staying compliant with the IRS, you can avoid penalties and interest charges, and make it easier to open a business bank account, apply for business credit, and hire employees. If you have any questions about acquiring an EIN or your tax obligations, it is always best to consult with a tax professional.