Registering for an Employer Identification Number (EIN) in Delaware is one of several processes that the majority of businesses will require when opening a business in Delaware. Although obtaining an EIN is optional, there are many good reasons for your business to do so. Read further to find out!
WHAT IS EIN NUMBER IN DELAWARE?
The Internal Revenue Service (IRS) issues businesses with an Employer Identification Number (EIN), a nine-digit number used for tax reasons. Similar to how your Social Security Number (SSN) may be used to verify your personal identification, an EIN number can be used to identify your company.
You may use an EIN number to register a business in Delaware, pay employees, get business credit, and keep your formal legal entity status. Additionally, you must use this number in order to create a business bank account, submit tax returns, and obtain a loan from a bank or other financial institution.
WHO NEEDS AN EIN NUMBER IN DELAWARE?
Many individuals mistakenly think that only large firms require an EIN, but in reality, the criteria depend on certain circumstances and activities. In other words, you could require an EIN even if you work independently or as a sole proprietor.
For taxation purposes, the following firms require an EIN number:
- Any kind of company with workers in Delaware
- Any organisation taxed as a corporation, including Delaware corporations
- Multi-member LLCs
The IRS also mandates EINs for representatives who manage an estate that runs a business after the owner’s passing and for trusts created by estate money.
STEP-BY-STEP GUIDE ON HOW TO OBTAIN AN EIN NUMBER IN DELAWARE
1) Prepare the required documents
The following is a list of materials you ought to have on hand before beginning the EIN application process:
- The name of the company’s proprietor or manager (probably you)
- The taxpayer identification number of that proprietor or manager
- Social Security Number (SSN)
- Individual Taxpayer Identification Number (ITIN)
- Name and postal address of your firm
- Other members’ names and addresses, as well as those of owners or managers
- The sector in which your business operates and how it functions
- What type of business do you run
- Your justification for requesting an EIN
- Amount of existing workers and how many you anticipate having in the next year
- The beginning and ending dates of your company’s fiscal year
- The day you’ll start paying your staff
2) Apply for an EIN number
The following step includes submitting a request for an EIN. Either you can do this online or through mail.
For online submission, file your application by completing the SS-4 form on the IRS website and later wait for the confirmation letter.
- Via mail or fax
Download and print the SS-4 application form from the IRS website if you want to submit it by mail or fax. Once the form is finished, you may send it to the indicated address or fax it to the number provided.
There is no fee when you file for an EIN directly via the Internal Revenue Service.
3) Obtain the result
You’ll obtain your EIN number within 4-6 weeks of submitting your application. After that, you may use this number to do things like create a bank account and submit taxes.
WHY YOUR EIN APPLICATION GOT REJECTED?
Although the IRS will often approve your request for an EIN, there are a few circumstances in which it may be rejected.
Following are some typical explanations for your EIN application’s failure:
- Social Security Number is not valid
- Issues with your application, including data omissions or typos
- Do not apply for a new EIN if you already have one (for example, if you were a single proprietor when you acquired your EIN but just converted to an LLC). Instead, complete a form to locate your current EIN
BENEFITS OF HAVING AN EIN NUMBER IN DELAWARE
Although obtaining an EIN isn’t something that every entrepreneur must do, it may speed up the startup process and simplify life in the long run. The following are some of the reasons for applying for an Employer Identification Number:
1) Obtaining a business permit
You might need to have an EIN before you can submit an application for a Delaware business license to run a corporation, depending on the state. One of these states is Delaware.
2) Boost credibility
An EIN makes a firm look more professional to potential customers, which makes it easier to acquire and maintain client relationships.
In the case of independent contractors and freelancers, having a company tax ID proves to potential employers that you are running a legitimate business rather than a side gig.
3) Personal identity protection
EIN is a useful tool to secure your identity and assist avoid identity theft. The likelihood of criminals acquiring and gaining access to your personal information is less if you have an EIN since you are not required to give your Social Security number (SSN) to customers or vendors.
4) Scale up operations
By giving a special identification number that may be used to monitor and control corporate activity. A business’s EIN also enables it to qualify for tax breaks and other advantages that might help it save money and expand.
5) Credit score for business
Having a strong business credit score might make it much easier for you to get authorized for loans and credit lines than it would be otherwise. This demonstrates to lenders that you are an accountable Business owner who is likely to pay your payments on time.
6) Easily hire employees
You need an EIN if you currently employ people or plan to in the near future. Obtaining an EIN doesn’t harm, but it might be tough to forecast whether you want to develop your company to the point where you would require more staff. Without waiting until you recruit your first employee, an EIN enables you to set up a payroll system immediately.
7) Create a business bank account
In addition to the required business permits to demonstrate your legal authority to operate locally, some banks require an EIN and a Delaware Operating Agreement in order to open a business bank account.
A crucial component of conducting business in Delaware is having an EIN number. It offers you a number of advantages that can aid in the expansion and success of your company. Apply for your EIN number as soon as you can, and then use it in the ways that will help your business the best.
Do not hesitate to contact Relin Consultants with any queries or worries regarding your EIN application.