As you wade through all the information about starting your own health & wellness business you may come across lots of new terms and abbreviations. One of those terms might be EIN – Employer Identification Number. Let’s talk about what it is and why you need one. And by the way, it’s free to obtain.
A Social Security Number for Your Business
An EIN is a nine-digit number (XX-XXXXXXX) that is assigned by the Internal Revenue Service (IRS). You apply for it online for your business, no matter what type of business structure you have – sole proprietorship, LLC, corporation, partnership – and can use it to file your taxes, open your business bank account, and apply for a retail-tax permit, among other things. It’s like a social security number (SSN) for your business.
Who Needs an EIN?
An EIN is required if you have employees, if your business is a nonprofit, corporation, or partnership, or if you have a Keogh plan (self-employed retirement plan). Also, your bank may require it when you open your business account. You might also consider an EIN even if these don’t apply to you to reduce the chance of identity theft of your social security number; you can use your EIN instead of your SSN if you are an independent contractor.
How Do You Get an EIN?
The IRS provides the EIN for free when you apply online. So, don’t fall for any websites that charge you a fee to obtain it for you. After answering several questions, the IRS provides you with a downloadable PDF document with your EIN.
When clients retain me to form an LLC for their new business, they authorize me to obtain the EIN for them as part of the service. I always let me clients know it’s free through the IRS if they’d prefer to do it themselves.
Email me at email@example.com or share your thoughts in the comments below.