3 Ways That an Employer Identification Number Can Help Your New Business

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(Newswire.net — February 1, 2018) — Are you planning to start a new business? While there are some small businesses that do not require one, it would still be advisable to apply for an employee identification number or EIN. If you have a Social Security number, then you can consider the EIN as the equivalent of a Social Security number but this time it’s for your business.

If you plan on growing your business, then you need to apply for an EIN right away. The process is easy as you can just use the ss4 form which is found online. It can also be safer because you won’t need to disclose your social security number to any of your clients or other vendors. If you’ve just started your business, you may be the sole proprietor and employee, and it would be your SSN that you would give to your vendors or suppliers if you still don’t have an EIN. The problem with that is that it is risky as it can lead to identity theft.

If you’re thinking that you can just put off getting the EIN and just focus on building your business first. But take a look at the list below to know how having an EIN is actually good for your business.

1.    You are able to open a bank account – you don’t need an EIN if it’s just for a personal account, but if you plan to open an account in the name of your business, then it is vital that you have an EIN.  It is safer if you keep your personal accounting and finances separate from your business.  It would be near impossible to get open a bank account in your business’ name if you cannot provide an EIN so be sure to apply for one as soon as possible.

2.    You need it if you want to apply for a business permit – it would be illegal to operate your business without the proper licenses and permits. Almost all businesses would need some kind of permit, whether it’s to sell, or a zoning permit or the like. Even if your business does not have an office yet, and you still operate from the comforts of your own home, you would still need some kind permit and in order to apply for one, your business would definitely need an EIN.  

3.    You need it in order to apply for a credit card or get a loan – if you’re just starting your business and you do not have enough capital or a regular cash flow to pay for all your expenses with regards to the business, you may need to get a credit card or even apply for a loan so that your business can continue to operate. In the same way that banks would find it hard to consider a business to open an account without an EIN, the same process applies to businesses who would like to apply for a loan.