Do I Have To Wait To Open My Business Until I Have Received My EIN?
You need an Employer Identification Number, or EIN, to legally perform most of the principal functions of your business:
- Open a business bank account
- Obtain permits and operating licenses
- Hire employees
- Apply for loans, business credit or credit cards
- Pay taxes
- Purchase, sell, import or export items
The good news is that it’s easy to apply for an EIN. In fact, when you fill out an EIN application online, you often receive your new tax ID number within 24 hours*. Once you have the EIN, you can open your business immediately.
*Most EINs are processed same or next business day, unless bundled with state formations, processing times will vary.
Why Is Important To Have an EIN for All Business Transactions?
Besides being a legal requirement for all tax-related business operations – with significant penalties if ignored – your EIN is also necessary to protect yourself from liability. For example, forming a C corporation gives you the advantage of personal protection in the event of loss or lawsuits; legally, the corporation is a distinct entity, even if you operate it yourself.
To enjoy these legal liability protections, it’s essential to make all purchases and transactions using your company’s EIN number, not your own social security number. If you use your own savings account to fund business purchases, you can lose liability protection.
What Steps Can I Take Before Applying for an EIN?
While applying for an EIN is fast and easy, and should definitely be near the top of your business checklist, there are other important planning steps that you can start beforehand:
- Determine your goals
- Create a business plan
- Decide what business structure suits your company
- Contact potential investors
- Find a location
- Pick a business name and check availability
- Register your business name
Once you have a mailing address and a business name, you’re ready to apply for tax ID number and take your business to the next level.
Learn More About the Advantages of Your EIN
A tax ID number opens up a world of possibilities for your business. Many sole proprietors who aren’t required to obtain an EIN still apply for one because of the legal advantages. Contact our helpful experts for important EIN information and effortless application help.