The EIN, or Employer Identification Number, is not explicitly required by the state of Oklahoma (it’s required by the IRS), but you should request one from the IRS regardless. Technically, you won’t need an EIN if you decide to be taxed as a sole proprietor, but it’s a good idea to obtain one in case your plans change. You’ll need an EIN if you’re opting to have the business taxed as a corporation or if you intend to hire employees.
The EIN is issued by the IRS and is a unique identifier used to track a given corporate entity’s taxes. You use the EIN for reporting and submitting payroll and corporate income taxes to the IRS. The EIN is free, and you can easily apply for one online through the IRS website or have us at Tailor Brands take care of it for you.
If you want to apply on your own, you can go directly to the webpage for the EIN application and enter the requested information. To apply, your business has to be located in the U.S. or a U.S. territory and have a valid Taxpayer Identification Number (TIN). This includes a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or EIN.
The application for the EIN has to be completed in one session as the IRS does not allow you to save and resume later. The session expires after 15 minutes of inactivity, and you’ll have to start over again. Be sure to review the information requirements before starting the form and have all the information to hand as you fill it out.
When you file for your EIN, you’ll be asked to choose your corporate status for the purposes of taxation. You can select sole proprietorship, partnership, C-corporation, or S-corporation. Each type of status comes with plusses and minuses, and you should consult with a tax professional before selecting a corporate status. Depending on your business structure, you may find that a partnership structure makes more sense than an S-corporation structure.
Getting an EIN has its advantages, even if you’re operating as a sole proprietor. The EIN can be used in place of your SSN, adding a layer of protection between your business and your personal finances. It also enables you to open corporate business accounts and gain access to the flexibility of banking at the business level. You can use your business name on your 1099s if you retain contractors, and it makes it easier to take care of FICA taxes if you hire employees at some point.