The EIN form is surprisingly simple. It doesn’t compare to nightmarishly labyrinthine forms like the FAFSA or even medium-sized ones like a U.S. passport application. In fact, the form to get an employer identification number (EIN) is only one page long. Not only that, but all of the questions are really easy, except for one. The only question on the form that requires a lot of thought is the one about business entity type.
Choosing an entity designation for your business
A business entity is an entity that is formed and administered as per corporate law in order to engage in business activities, charitable work, or other activities allowable. Your form of business determines which income tax return form you have to file.
There are many available entities among which you can classify your business. Some of them are quite self-explanatory; for example, you probably know automatically whether or not your project is a religious institution. Corporations, limited liability companies, and sole proprietorships are types of common business entities.
When you choose to form a Corporation, Independent legal and tax structures are separate from your own. There is no government filing required to form a sole proprietorship. And it’s easy to form and operate.
Starting an LLC gives you the perk of pass-through taxes, limited liability (obviously), and legal protection for your personal assets. Plus the added benefit of looking more legit than the other guys.
It makes sense to choose the Sole Proprietorship entity if you are a one-person business, working for yourself. Did you know that you should also choose Sole Proprietorship if you are paying even one household employee, such as a babysitter, as part of your household budget?
Some of the definitions are less intuitive, though. Choosing the right entity for a business or investment requires careful analysis of both tax and non-tax issues.
To choose an online entity, read the definitions on the Gov Doc Filing website. Be informed. Research. Know enough to know the direction that you generally want to go. If you are still not sure, a professional accountant or business lawyer can help you choose.
What to do after you choose your business entity type
After you choose your entity type, you are ready to apply for an EIN.
Gov Doc Filing will send you a confirmation email, containing your EIN, almost immediately after you file. In other words, it usually only takes an hour to get your real, legal EIN. Then you will be ready to get to work with your business.