Following the incorporation of a company, one of the first things to do is probably to obtain a federal tax ID from the Internal Revenue Services (IRS). This federal tax ID for your company, known also as EIN (Employer Identification Number). EIN is a unique, nine-digit number that is assigned to every operating business in the US for the purpose of identification and taxes. In a way, EIN is an identification number just like a Social Security Number (SSN) but for a business, which gives the entity its own identity to keep it separate from individuals. It is especially beneficial when you hire employees, establish a payroll, get special licenses and local permits, open a bank account and so on.
As a rule, every corporation or LLC (other than a single-member LLC) must have an EIN. Not all businesses are required to have an EIN though. Businesses that are not legally separated from their owners do not need an EIN. Before applying online, you should be sure if you need a tax ID for your business.
Latest changes in the tax law has allowed certain businesses to benefit from tax deductions. These changes:
- Deducting 20% from gross income if income is less than $157,500 US dollar per year
- Deducting 30% of a depreciated item’s value in the first year
- Passing business and financial legacy to beneficiaries tax-free
- Claiming missed deductions from as far back as 2014
To qualify for these tax deductions businesses and companies must first apply for an EIN and have one.
Do you have questions or you are not sure whether you can benefit from these deductions? Please do not hesitate to contact us!