Starting and Running a Small Business – Apply for an EIN
Getting your small business an Employer Identification Number (EIN) with the Internal Revenue Service is a relatively simple process that you can do on your own.
An EIN isn’t required of all businesses.
If you have no employees, there is a chance you don’t need to apply for an EIN.
However, I would recommend obtaining one regardless of whether it is required or not.
If you don’t, you will have to use your social security number when you go to open up a bank account and complete other types of transactions.
In this post, I walk you through the relatively painless process of getting an EIN for your business using Embarkment Salon, LLC as an example.
Embarkment Salon, LLC is an LLC owned 100% by one person.
The following example is based on that.
Your business may be a different type of legal entity or have a different number of owners so you would complete the application in a way that applies to you.
However, the core steps are the same regardless of your business type and the example should still give you an idea of the process.
Important Disclaimer: I am a licensed CPA and do have experience in the matters discussed below. However, I am not an attorney. The information in this post should not be construed as legal advice and I always recommend it is ideal to consult with your own attorney or CPA when it comes to your legal and financial matters.
Links Used in This Post
Click on the IRS link above to take you to the IRS website and the page where you will begin the EIN application.
Click on the “Apply Online Now” button and then click “Begin Application” on the next page.
Choose your legal structure.
Embarkment Salon is setting up an LLC.
There is one predicament when applying for an EIN and setting up an LLC (or other type of separate legal entity) when you are first starting out.
It’s like asking what came first, the chicken or the egg?
When you apply for the EIN you will be asked what type legal structure you set up and when you set up your legal structure you will be asked for your EIN.
As long as you set everything up at the same time, which I am doing here, you should be okay to indicate you are an LLC, obtain the EIN and then set up the LLC immediately after.
After choosing your legal structure and clicking “Continue” you will arrive at a page explaining your choice.
Review this and confirm that it makes sense.
Then, click “Continue” again.
Owners of an LLC are called members.
On the next page of the application, you indicate how many members are in the LLC and in what state your business will be located.
Embarkment Salon will be owned by 1 person and will be located in Maryland.
After inputting this info, click “Continue”.
On the next page you will be asked to confirm your selection.
If everything looks good, click “Continue” again.
In this step you are asked to indicate why you are requesting an EIN.
Embarkment Salon is starting a new business.
I make the appropriate selection and click “Continue”.
On the next page I indicate who the responsible party is.
Per the IRS guidance, this is a person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets.
“Individual” is the appropriate selection for Embarkment Salon and most small business.
I choose “Individual” and click “Continue”.
Enter the responsible party’s name.
For this example, I am entering my name, as the IRS system attempts to match up the social security number with the name you input.
On the next screen you will be asked to enter the main physical address of the LLC.
In this example, I list an address for where Embarkment Salon will be physically located.
After entering the address, I click “Continue”.
The next step is to provide some basic information about your LLC.
The name of the LLC, state where the LLC is physically located, state and county where the LLC is organized and the date the LLC is starting are all required pieces of information.
If you are operating using a trade name other than your LLC name, you would enter this information.
Embarkment Salon will not be operating under a different name so I will leave this field blank.
After filling out the required fields, click “Continue”.
On the next page there are some additional questions that need to be answered about your LLC.
I answer the first 4 questions with a “No”.
I suspect you would too.
The only question that may need to be answered is the last one regarding having employees.
If you anticipate having employees, as Embarkment Salon will, you should mark this box yes.
Then click “Continue”.
If you answer “Yes” to any of the questions on the previous page, you will need to answer some additional questions on this page.
Embarkment Salon will have employees, so I answer the additional questions about how many employees I expect to have, when I expect to start paying them and whether I anticipate having payroll tax liabilities exceeding $1,000.
Answer these questions, if applicable, and click “Continue”.
On the next screen, or couple of screens depending on what options you choose, you will be be asked what industry you are operating in.
Choose the option(s) apply to you.
Then, click “Continue” to wrap up.
On the last screen of the application you will choose if you want to receive your letter and EIN instantly online or if you want it mailed to you.
After you click “Continue” one more time you will see a summary of your application.
If you opt to receive it instantly, submit the application and you will be all set up.
If you opt to receive it in the mail, you should receive it within 4 weeks.
Feel free to comment below or connect with me on social media.
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