Employer Identification Number or EIN is a nine-digit number attained by a business to identify the employer’s tax account. It has a format of (XX-XXXXXXX) that is mandatory to file business tax returns. Businesses or companies need to secure an EIN if they are a sole proprietor, operate as partnerships or corporations, a non-profit organization, estates, government agencies, individuals and other business bodies.
A sole proprietorship is the simplest form of business structure that is owned by one individual. It has no separate existence from its owner. It can operate under the name of the owner. The registration of a sole proprietor needs only to register his or her name and acquire licenses to start up the business. A sole proprietor may also be required to file other tax employment returns.
A partnership is a relation between two existing persons joined together to engage in a business. Partners add up the money, labor, property and share in the liabilities and profits they earned. Form 1065 is used by a partnership in filing U.S Partnership Return of Income and other tax returns.
A corporation is established by a group of shareholders who have the control and owner of the corporation. It is a legal entity created under the authority of the laws and it is characterized by their holding common stock to go after a common goal. Corporation has a single or several shareholders. Shareholders revel in most of their rights since its entity is considered from separate from is a member. They have the right to sign into contracts, borrow and loan money, hire employees, pays taxes for the corporation’s common stock. Corporations are being taxed jointly as being stated in the law. They usually file a Form 112 series return and other tax employment returns.
Another entity is the Estate, that is legally created in respect to a person’s death. The person who has died estate is a separate legal entity for federal tax purposes. It consists of real and or personal property of the person. It is used to pay debts of the deceased person and disburse the remaining balance to his/her beneficiaries. Form 1041 to the US Fiduciary Return of Income and Form 706, US Estate are used in filing tax returns.
A trust is a legal entity created under the federal law. It is a deal which trustees take title to the property for the protection and maintaining it for a probable court rule. It can be created during the time of where a person is dying, it is also called the last will testaments. Form 1041 is used in filing.
These are some examples of the entities where you can use the Employer Identification Number on all of the information that you can send to Internal Revenue System or IRS and Social Security Administration or SSA. Either you will need a new Employer Identification Number or not, There are steps that you need to follow further in order to apply and attain an Employer Identification Number or EIN.