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When you should apply for your tax id application

Lan Bell Lan Bell , 6/30/2018
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After much thoughts, many new business owners prefer to start their business small and they usually chose to register their small company as the Limited Liability Company because of its many benefits. What are the advantages and disadvantages of a Limited Liability Company?

 

·         A LLC provides limited liability protection to its owners, also known as members and who are not personally responsible for the business debts and liabilities of the company. The creditors cannot pursue the members’ personal assets such as their house, savings, etc. to pay the business debts.

 

·         Any business tax due is paid at the members’ individual level. The LLC members do not pay taxes at the business level.

 

·         Limited Liability Companies face fewer state imposed annual requirements than other corporations.

 

·         An LLC enjoys flexible management structure and is free to establish any organizational structure agreed upon by its members.

 

·         There are few restrictions on who can be the owner of an LLC or the number of owners of an LLC.

 

Like all other companies, an LLC has its share of potential disadvantages:

 

·         Many states impose filing fees for the formation of an LLC and there are ongoing fees, such as annual report and franchise tax fees when applicable. Compared to the sole proprietorship or partnership, the formation of an LLC is more expensive.

 

·         All existing owners must approve the adding of new owners or the transferring of ownership.

 

One can easily form LLC online, and it is after the formation of the LLC that you have the LLC formation date to fill on the EIN application form. EIN is the Employer Identification Number and is also known as the Federal Tax ID Number. It is not advisable to obtain your EIN before the formation of your LLC. If you need to resubmit a new name for your LLC, then the approved EIN will be attached to the LLC name that was not rejected, and you will have to resubmit your EIN or tax id application for the approved LLC name.

 

You will have to cancel the first EIN and re-file your LLC to fix the issue of the rejected LLC name. You will have to wait for the LLC to be approved. Once the LLC is approved, you can then apply for a new EIN for your LLC without waiting for the confirmation letter for cancelling the previous EIN.

 

If you need help in your application for forming your company, application of EIN, and other additional services such as payroll services, financing and loans, etc. you can seek the help of service providers such as GovDocFiling or visit its website at https://www.govdocfiling.com/.

 

 A sole proprietorship or an LLC with no employee is not required to apply for an EIN. An EIN or a tax id number is required if a sole proprietor needs to file pension or excise tax returns, and it is required for most business entities. The Internal Revenue Service or IRS uses the EIN to identify businesses with respect to their tax obligations.