Business Law For Everyone

EIN – Do You Need One?

| Apr 9, 2021 | Formations |

I have always been a big promoter of the use of EINs (Employer Identification Numbers).  Probably the only free thing you can get out of the IRS, an EIN number gives your company it’s own formal identifier, not unlike a Social Security number.  It’s particularly useful when running your own business, because you’d be surprised how often it comes up. Opening a bank account? Dealing with a large vendor? Taxes? How comfortable would you be having your Social Security number floating out there in the world for your business? With an EIN, you can have that additional security that your identity won’t be stolen along the way. Lately, it’s become clear to me that people have issues identifying when an EIN is appropriate and when you should get one. Each time you start up a new entity, you need a new EIN.  If you had a DBA and are now creating a LLC (even if it is the same business name) you need a new EIN. To confuse things further, a DBA within an LLC does not need a new one because it’s considered a ‘nickname’ for the LLC. The other question always is, when should I get one? Usually the answer is right away, but you need to take into account the timing. Make sure your new business name has been accepted by the county or state in which you are filing. Why? You want to make sure the name is correct. Sometimes the government won’t allow you to use the exact wording you had in mind.  You might have to reword or add additional words to your name. Once you have the official name approved by the government (state or county), then you should seek an EIN number. The names have to match. And you need the paperwork to be correct to move forward with setting up the bank account or filling out the W-9 because it could cause issues in the future.  Take your time online and get it right, or just ask me.  I can help.