Benefits of an EIN
We often think about all the paperwork of starting a small business or freelancing as long and messy. Something we HAVE to do, rather than stuff we want to do. Reframing it to something that is your ticket to freedom and creating something you own is a much better choice,
Like everything in business, you need to make sure that there is a benefit for you doing something, and having an EIN has a few. So before you start your FEIN application here, check out these benefits!
If you dream of being a digital nomad, having an EIN gives you more options. Non-us nationals can apply for an EIN by contacting the IRS. This means that you may be able to open a business bank account and even have credit before getting a Social Security number. So if you want to work in the US for a while, this can help smooth that road.
Perhaps you know that your business venture will need some immediate cash injection – or that, over time, you want to access business credit. An EIN is a must for you to establish a business credit history.
When you apply for credit and supply your EIN, the application will start adding to your credit report. Over time if you keep these in good standing, you will get better rates and terms from suppliers.
Aas your business grows, you are going to want and need employees. Without an EIN, you will not be able to start that process. While the growth of your business isn’t guaranteed, it is a good idea to have everything ready.
Scaling ahead of growth is essential, and getting an EIN is part of that. Setting up payroll will be possible immediately. So to make sure that you are ready to hire your first employee the moment your business is ready – get an EIN.
If you choose to open a regular bank account, you might miss out on some of the best business banking perks. We know that having a separate account for your business income and outgoing is a must – and your EIN is the only way to get one.
The biggest banks will ask you for proof of your EIN during the application.
Millions of small businesses pop up every day, and vendors will get their fair share of those with less than good intentions. Getting an EIN allows for a higher level of trust from those vendors.
It makes third parties more likely to work with you and allows you to make orders from them. It’s not just you; your EIN is how these third parties can check on your credit score – which tells them if they are likely to have a good relationship with you or not.
Credible businesses that have some credit are more likely to get favorable contracts with vendors. Those without might need to pay for the materials or services upfront.
Once you obtain an EIN, you are no longer required to give clients or vendors with whom you do business your personal Social Security number. You can instead give your EIN.
Cybercrime and identity theft is something that all small businesses and freelancers need to be guarded against – your EIN can help to fortify those efforts. Since you will use your EIN, you have the opportunity to keep your Social Security number better protected.
It is becoming more common for larger companies to hire freelancers and smaller companies to do work for them. They are much more likely to opt for a business or freelancers with all their paperwork and an EIN.
When you take on clients, you will be required to give them your Social Security number or your EIN – the EIN is more secure. You must give them this so they can give you a 1099 tax form.
Without an EIN, to the outside, you can look like you aren’t serious about your business, but with the one, you have registered it with the IRS and effectively saying that what you are doing is a business and is legitimate.
Some businesses are not required to get an EIN, but it can be convenient even if you don’t need to. Specifically when tax times roll around. If you want to make the most of credits and deductions, then an EIN will help ensure you maximize them. Aside from the EIN, here are a couple more things that you need to keep in mind: 5 Things You Need To Start Making Money From Home.