If you are doing business, the sensible step is almost always to form a commercial entity that protects you from judgments. If you complete this step, you need to obtain a tax identification number.
Let’s be realistic. There is a certain amount of legal risk if you do business for yourself. You just need to watch the news or read the newspaper to see all kinds of terrible demands and court decisions. Listen, we all remember the jury, which awarded three million dollars to women who said their McDonald’s coffee was hot. If this does not scare you, nothing will happen.
Fortunately, the law also gives you some ammunition to deal with possible lawsuits. The ammunition is presented in the form of commercial entities that protect it from personal liability for commercial debts. These debts include judicial decisions.
Corporations and limited liability companies
The two most common business objects used for this purpose are corporations and limited liability companies. Although each of them is unique, they create a shield between your personal assets and your business. This is because the entities are seen as unique people. If they get into trouble, you are not responsible. For example, buying shares in Google, a public corporation, does not mean you’re hooked if Google loses the lawsuit.
Obviously, the protection of the responsibility of a commercial entity is good. In doing so, you must treat it as an individual to keep the shield in place. In this case we are talking about obtaining a tax identification number. Of course, the IRS does not call it that. Instead, it is called the employee’s identification number or EIN. So, what is the tax id number application guide for you to get one?
The first thing you should do is download the SS-4 form from the IRS website. Fill it in so you have all the necessary information. You can send it by mail, but it will take forever to receive an answer. Assuming you want things to go faster, the simplest way is to contact them. You will be asked to provide information outside the form and you will be immediately informed of the EIN. In addition, you can go to their website and apply online. Just find the “EIN” and then complete the form. It is important to note that you write down the EIN when it appears, since the IRS does not send you a confirmation email.
Obtaining an EIN for a business object is quite simple. Just make sure you need one. An owner LLC is often not. If you have any questions, hire an accountant to do so. It will cost a couple of dollars, but it is worth doing well.