Setting up a new business, even a small business on your own is no small matter. There are so many things to look into and to get ready before you can start your business. Things like the types of products you want to sell, whether you are selling online or whether you will need a shop for your business. If you want a shop business, then you will have to look for a good location for your business. Finding a shop to rent may not be easy in a good location and very likely, the rent will be very high in a good business area. The list is endless and it can be very stressful at the preparation stage.
There are some legal matters that you will need to take care of before you can set up your business. You will have to apply for a business license and a Taxpayer Identification Number, also known as Employer Identification Number (EIN). These are two most important things that you will have to take care of.
A business license is a permit issued by government agencies which allows an individual or a company to run a business. A business license is used for registering for business tax collection, for generating revenues, and etc. Depending on the city your business is located, filing for a business license might require the Social Security Number of the owner or owners, directors and officers of the business entity. The same applies for foreign corporations or Limited Liability Company for the government to track the individuals responsible for the business. In some cities, application for the business license will require the applicant to provide the Tax Identification number or the EIN.
A tax identification number or Employer Identification Number (EIN) is a 9 digit number issued by the Internal Revenue Service. If you intend to have employees working for you, you will need to apply for an EIN. As a business owner, you can easily apply online for tax id number on the Internal Revenue Service (IRS) website.
A tax identification number or the employer identification number will be not required for the application of a proprietorship or a partnership business. You will only need to provide your personal social security number. But, if later in the future, you may decide to take in employees, then you will need to apply for an EIN. The EIN is a one-time permanent number and does not expire. It is used for tax administration purposes.