Your Business Needs an EIN

Giselle Ayala Mateus, Esq.

After a business is established, whether it is a corporation, a limited liability company, a sole-proprietorship, etc., it is necessary to take additional steps to hire employees and be in full compliance with the law. To hire employees, a business needs an Employer Identification Number.

An Employer Identification Number (EIN), also known as Federal Tax Identification Number, is a digit assigned by the Internal Revenue Services and used to identify a business entity. An EIN may be assigned to entities that have employees and to others that don’t. EINs are assigned to, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, and certain others.

To assign an EIN the IRS identifies the responsible party for tax purposes and assigns one number per responsible party. The responsible party is the true principal officer of a business, or a general partner, a grantor, an owner, or a trustor, who controls, manages, or directs the applicant entity and the disposition of its funds and assets. In this particular case, only natural persons, individuals may act as the responsible party. The only special case where an entity is a responsible party is in the case of government agencies.

Before applying for an EIN an entity must have been appropriately created and organized. Although you may apply online, by fax, or by mail, it is always advisable to get legal counsel in regard to all the compliance aspects of your business. If you have a question, or there is an issue of your interest you would like to address, feel free to write to ayala@gisellea.sg-host.com. Additionally, G.A.M. Law Office provides legal research, consulting, and counseling services focused on providing the answers clients need to make informed choices.

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