Thanks to the friendly policies and diverse workforce, Texas is an excellent place for starting or relocating a business. The total number of workers in the Lone Star State is 14.85 million, from various backgrounds. The business-friendly environment, diversity, and thriving economy drive unprecedented economic growth.
Launching a new business requires using various practices to ensure compliance and establishing a financial foundation. One of the most critical areas is deciding whether you need an Employer Identification Number (EIN). We discuss its importance and why your business needs one.
The Importance of an EIN for Your Business
An EIN is the nine-digit number that the IRS provides to businesses. It lets the IRS monitor and recognize separate legal entities (such as businesses) for tax purposes.
The EIN is critical to the success of your business for numerous reasons, including.
Opening a Bank Account
Banks require businesses to provide an EIN to open an account. It separates the business’s assets from personal assets and is critical to have liability protections.
Hiring Employees
Any business planning to hire employees should have an EIN to cover state and federal withholdings and taxes.
Getting the Necessary Licenses and Permits
Local, state, and federal governments require an EIN to get the necessary licenses and permits for operating a business. The mandates are included in . . .
- The Federal Privacy Act of 1974
- The Tax Reform Act of 1976
- The Texas Government Code.
Local governments could have specific requirements for an EIN to get various permits.
Taxation
The EIN is used for reporting various taxes, including employment, excise, and income. The EIN streamlines this process and simplifies everything.
Establishing Credit
Financial institutions require an EIN to obtain, establish, and build credit for your business. It legally separates the liabilities from your business and personal affairs.
The Weisblatt Law Firm has years of experience advising businesses on these practices, including EINs. We will guide you and ensure your business fully complies with all local, state, and federal regulations. Contact us at (713) 666-1981 to schedule your free phone consultation with a skilled business attorney.
Is an EIN Necessary for Your Business?
Your business structure could require an EIN to streamline everything and ensure you are legally compliant. Those businesses that should have an EIN include:
Sole Proprietorships
If your business is a sole proprietorship and hires employees, you will need an EIN. It ensures that all payroll taxes and deductions are properly reported to the various government entities. An EIN is necessary if you plan to offer your employees retirement and health benefits.
Partnerships
Partnerships need an EIN, even if there are no employees. The complexities of these businesses require reporting income to local, state, and federal tax authorities.
Nonprofits
Nonprofits need an EIN to correctly report their tax-exempt status, all contributions, and donations.
Limited Liability Companies
Limited liability companies (LLCs) require an EIN to record the company’s income properly. These entities pass through income to the owners, and the EIN must show the company’s income.
Corporations
All corporations need an EIN to correctly report the assets, liabilities, and income. Corporations are considered separate legal entities, and you must have an EIN regardless of the type of corporation you are establishing, such as S-corporation or C-corporation.
We recommend speaking with a skilled business attorney in Texas about your situation. EINs are a necessity. We will guide you to ensure you have an EIN so your business runs smoothly.
The Benefits of an EIN
EINs are one of the best ways to build up the credibility of your business, offering numerous benefits, including:
Getting a Business License
Local and state governments require that you have an EIN to get the necessary business licenses and permits to operate legally. The EIN simplifies things and ensures everything goes smoothly with the least issues.
Access to Financing
Most banks require an EIN if you plan on taking out a loan. The EIN is like your Social Security number but for businesses, and it establishes credibility at financial institutions. Banks are more willing to take risks in loaning to businesses when they have an EIN. It shows that you follow all the proper regulations, giving lenders additional assurances.
Safeguard Against Identify Theft
EINs help to protect you against identity theft. You never provide your personal information to contractors, vendors, or customers. Instead, you give them the EIN and protect your private information, such as a Social Security number.
Legitimacy
An EIN shows that you are a legal business. It helps you attract freelancers and contractors when you provide tax information, such as a 1099 tax form. The EIN identifies your company and shows that it is registered to do business legally. Your business gains credibility and legitimacy from having it.
We recommend speaking with a skilled attorney about how an EIN will help your business. You will learn why an EIN is necessary to take your business to the next level.
Why Choose Us?
The Weisblatt Law Firm’s attorneys will help guide you and simplify getting an EIN. We offer you numerous benefits, including:
Experience
You work with a skilled attorney who has experience assisting various-sized businesses, from start-ups to large multinational corporations. Regardless of your size, we will give you legal advice customized to your situation. An EIN is the first step in building your brand and showing that you are a legitimate business.
Attention
You are more than just a client to us. You are a business owner who needs objective legal advice. We are always available to discuss your situation and help you get an EIN. We simplify everything so you can relax and focus on growing your business.
An EIN is necessary for businesses, and we recommend getting one immediately. Contact us at (713) 666-1981 to schedule your free phone consultation with a skilled attorney. We will review your situation and discuss how an EIN can make a difference. You will get objective legal advice to help your business grow and adjust to its challenges.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
