A Company Registration Number is issued in the United Kingdom to identify a company that is registered with the Companies House. In the United States, corporations are registered at the state level, and a good number of States are known to provide these businesses with a corporation Identification number to identify the corporation.
There is no federal level Company Registration Number in the United States, so the Employer Identification Number (EIN) is used to identify a corporation in the United States and it is similar to Company Registration Number in the UK.
Also known as Federal Tax Identification Number, Tax ID Number, or Tin, Employer Identification Number (EIN) is an identification number provided by the Internal Revenue Service (IRS) to every American business, whether incorporated or not, with or without employees.
It is a single nine-digit number (xx-xxxxxxx format) that is made up of, to an extent, the social security number of the Company. It may be required by various parties, such as government agencies, suppliers, etc. Even before you open a bank account using your Company’s name, all American banks will ask that you provide an EIN.
Have it in mind that all businesses in the US are mandated by law to provide certain information to the IRS to comply with relevant tax laws. Owing to that, the Employer Identification Number (EIN) remains a very vital tool every business is expected to have.
The IRS tends to provide EIN to business owners free of charge. The application process will take less than 10 minutes and the number will be assigned to your business immediately. The IRS will provide a printable copy of EIN information that you can present to the bank or license boards, clients, and vendors.
Primary Uses of an Employer Identification Number in the United States
Regardless of the type of business you have, it’s always a good idea to obtain an EIN. You can always apply via the EIN Assistant on the IRS website since it is a free and simple process. The primary uses of an employer identification number include;
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Maintain Corporate Veil
For businesses with a single-member LLC, an EIN ensures that you can adequately maintain your corporate veil. Note that a corporate veil protects business owners from personal liability as a result of business debts.
Have it in mind that separating your personal finances from your business finances ensures that you can avoid liabilities piercing your corporate veil. It will also guarantee credibility and professionalism by making sure your business has a separate identity from that of its owners
To Protect Your Identity
Regardless of the size of your business, an EIN will most definitely offer a layer of identity protection. According to reports, the modern business world is ridden with opportunities for identity theft. Owing to that, business owners are always striving to keep their personal information safe and private.
Note that an EIN helps to keep your social security number private. When vendors look for credit information, or customers ask for data to make payment, your EIN is the number they use.
Hire Employees
In the United States, businesses with employees are expected to obtain an EIN since a multi-member LLC does not file or pay taxes as the LLC; instead, each employee will file their taxes separately under the LLC’s 1040 form.
Employers will most definitely need an EIN to set up payroll, and the IRS will leverage the business’s EIN to track payroll taxes. This identification number is very crucial to register your State’s employer taxes, such as paying for workers’ compensation and withholding income taxes on behalf of your employees.
Plan for Retirement
In this modern era, adequately planning for retirement is a necessity for small and medium-sized businesses. No matter how much you may love your work, you will retire one day, and you will want to do so comfortably. Note that even the self-employed can establish 401(k) retirement plans as long as they have an EIN. According to experts, retirement funds can be quite beneficial, tax-wise, than a personal IRA.
Pay Business Taxes
The primary use of an EIN is to pay and track taxes. Note that the ID number makes it more convenient to file federal and state taxes, quarterly or annually. It is the identification number you will have to use when filing your company taxes with the IRS at the end of the year.
Have it in mind that every key financial decision made on your business’s behalf will be tied to its EIN. When you apply for one as soon as possible, you won’t have to contend with the risk and penalties of missing your business tax deadlines.
Establish Credit
Lending and credit agencies are known to use an EIN to track your business’s credit. Establishing strong credit will ensure that you can maintain your business’s financial stability, and applying for an EIN is one very crucial step.
Note that good business credit can ensure you obtain better interest rates, more loan qualifications, and a better chance of growing your company in the future. It helps to boost your chances of good loan rates from vendors and creditors.
Apply for Credit
Truth be told, you don’t necessarily need an EIN to apply for all business loans. A good number of lenders prefer a company that has established its business credit through a business bank account.
Also note that you have a better chance of qualifying for certain loans if you have strong business credit, and to start establishing that credit, you will have to first get an EIN. If you don’t yet have a social security number or are overseas working with American clients, an EIN can help you apply for credit, open business accounts, and even hire workers in the states.
Guarantee Business Growth
The primary objective of every business owner is to start and manage a flourishing business, and one day you may have to seek a loan to expand. Note that an EIN will be required to carry out all banking transactions — from opening business checking and savings accounts to applying for a loan.
Also, note that having the EIN before you are even ready to fill out loan documents (and establishing your business with a bank in advance) will help guarantee you get the funds you require to bolster your business.
Prove Professionalism
Note that professionalism is a key feature for businesses in today’s competitive environment. New and growing businesses will have to leverage every possible opportunity to gain a fair share of their market.
According to experts, an EIN provides your company with gravitas: this isn’t just a side hustle or a part-time hobby — this is your business. Have it in mind that customers and suppliers are only willing to work with businesses that are serious and reliable, and the EIN helps to prove that about your business.
Obtain Licenses
For businesses that require certain forms of licenses and permits to operate, you will need an EIN. Note that an EIN ensures that you can provide state and local authorities with the necessary information they need about your business and help verify you have the credentials required to effectively run your business in line with stipulated laws and regulations.
Conclusion
Just as was noted above, there are no Company Registration Numbers in the United States; rather the Employer Identification Number (EIN) is used to identify a corporation or other companies in the United States. Applying or registering for an EIN from the Internal Revenue Service is free and can be done easily online; however, you can apply by mail or fax as well. address, name, etc.