Aron Govil: What are the benefits of having an EIN?

A number of benefits arise from establishing a business in the United States. One of the most beneficial is obtaining an Employer Identification Number or EIN explains Aron Govil. There are several important reasons why this might be something that interests you, and even some things that might not have crossed your mind before now. The more insight you have into this decision, the better able you’ll be to make a choice about it right for your circumstances.

For starters, many taxpayers who run small businesses find it convenient to file their tax returns with an EIN instead of using their Social Security number (SSN) all year long. It’s generally easier to keep track of deductions and credits by having separate business and personal accounts, rather than filing one return for your business and another for yourself. If you use an EIN, your business will have its own separate tax account with the IRS.

As per Aron Govil another benefit of having an EIN is that it makes it easier to open up a bank account that’s specifically dedicated to business transactions. While some banks do allow you to create new accounts using only your SSN, others require you to provide them with your Business Identification Number instead. Having both numbers on file at the bank can be extremely convenient when it comes time for you to make financial transactions or see how well your business is performing financially.

But these are by no means the only reasons why many small businesses choose to get an EIN today.

The following list shows just some of the most important benefits associated with establishing a business account with the IRS:

1) If you have employees, the EIN will help you properly report your wages to the agency.

2) The IRS often asks business owners for an EIN when it’s time to file returns or make changes to existing accounts. For example, if you decide to hire independent contractors or subcontractors this year, you’ll need your Business Identification Number in order to complete your tax filings correctly.

3) Purchasing licenses and permits is typically easier if you’re already registered with the IRS as a business entity. You may find that some government agencies require that companies obtain an Employer Identification Number before they can obtain certain types of licensing. Having your EIN can be immensely beneficial in situations like this because it can save you a lot of time and hassle says Aron Govil.

What are the benefits of filing taxes with an EIN?

Aside from all the reasons mentioned above, another thing that makes using your SSN. For tax purposes seems like it would be easier is the fact that you already have one on hand. You probably use it every year when April 15th rolls around, so why not just stick to what’s familiar? While this might seem like a perfectly reasonable idea at first glance, there are actually several important reasons why you should really consider getting an Employer Identification Number instead.

When forming a business, some may choose to use their social security number as the identification number. But those who have employees or plan on hiring workers will need an Employer Identification Number. This is a nine-digit number required by the IRS specifically for businesses. Having this number can help keep a business running smoothly and protect both it and its business owner.

Financial protection for business owners

Business owners, whether it’s an individual or a group of investors. Are solely responsible for making sure that the actions of their employees don’t create legal issues for them. But if they provide false information about an employee to evade taxes or hide any other information. Then both parties can be liable for any damages. With an EIN, the company is responsible for providing information about its employees. While keeping legal liability; business owners are protected from any illegal actions that their employees take says Aron Govil.

Tax filing benefits

Business owners who file taxes on their own should receive a tax identification number to include. With all of their income and expenses in order to ensure they receive tax credits and other benefits. Without this number, there is no way to prove that these items are connected to the business owner. Which could potentially leave them ineligible for many types of assistance within the United States.

Business support

Since an EIN is required by businesses that hire employees or plan on hiring employees. It can be used to show how long the company has been in operation and if its licenses are still active. This information doesn’t provide any legal protection but can help build trust. Between customers and business owners since they know the company has existed for at least several years. This will put their minds at ease knowing that they’re giving money to a reputable company. Instead of one that might not exist much longer.

Regardless of whether you’ve hired employees or not, an EIN is a good idea for any business owner. Who wants to make sure they don’t run into any issues with the IRS and their business.

Conclusion:

An Employer Identification Number is typically an EIN. It is a number assign by the IRS to companies for tax filing purposes. So they can keep track of financial information related to their business. The main benefit of having an EIN is that it’s require when you hire employees, whereas your SSN isn’t.

As per Aron Govil the first major reason has already been discussed in detail: having an Employer Identification Number is simply better for your business’s bottom line. No matter how big or small your business is, keeping track of all income. And expenses from a single account can be a lot easier than trying to manage two.