Why is it important to have a separate tax id number or EIN Number for your business…

 

Applying for a tax id number is important because it provides the business owner the opportunity to separate personal and business expenses and use the opportunities afforded to business owners..

Here are some advantages of using a tax id number:

1.      1. Personally separate yourself from the operations of the company

2.      2. Not providing your social security number to vendors you are doing business with

3.      3. Opening a business bank account requires a tax id number

4.      4. Need to obtain a credit card for business operations, you will need a tax id number

5.      5. Bringing on employees? Payroll tax payments require a tax id number

6.      6. Business licenses to operate in your state or local county need tax id info

7.      7. Tax returns for the business require a tax id number

Although applying for a tax id number isn’t required as long as the entity type doesn’t change, getting a tax id number can help prevent identity theft and avoid being classified as an independent contractor.