Each company needs an EIN, a tax ID issued by the IRS. We recommend getting your EIN when you incorporate your company.
At this stage, you’ll determine how your organization will be taxed. You can choose any type of taxation (for example, an LLC can be taxed as a corporation).
Types of Taxation
There is no difference between the company and the owner. From the IRS’ perspective, the business isn’t a taxable entity. Instead, each liability and asset of the company, in addition to the revenue, is owned by the person with ownership of the organization.
Similar to sole proprietorships, the business and a minimum of 2 owners are identical. A partnership isn’t an entity that is taxable under federal law. Instead of a separate partnership income tax to pay, a corporate income tax is due. Income produced from the partnership is taxed per partner at their own separate rates. For tax reasons, all income earned from the partnership is sent to the partners and listed as “passed-through”. Each partner is taxed on their own individual returns.
Limited liability company (LLC)
A stand-alone legal entity created by a state filing. State laws provide LLC owners with liability security that at one time was only given to a corporation’s shareholders. For federal tax purposes, LLCs today are treated the same way as partnerships (assuming they choose not to get corporation treatment). The LLC taxation process is “pass-through”, so tax payments on income are paid at a business level. Loss/income is declared on every owner’s individual tax returns, and taxes are to be paid separately. When it comes to federal taxes, although LLCs are treated just like partnerships, the same can’t be said for state tax purposes.
A separate legal entity created by a state filing. Income tax must be paid by the C corporation, otherwise known as a “regular” corporation. Revenue produced by a C corporation is generally taxed at corporate income tax rates. Further, revenue generated by a C corporation has to go through “double taxation,” which is comprised of the business’ taxable earnings (divided among the owners via dividends). The corporation first pays taxes on its revenue prior to being taxed again by owners on the dividends acquired. The corporation must also pay income tax and FICA if it pays the owner a salary.
A separate legal entity created by a state filing. For tax purposes, the S corporation sets up a tax payment plan with the IRS for the sake of getting the same tax treatment LLCs and partnerships get. Taxable earnings are “passed-through” since the business’ loss or profit is passed through the company to the shareholders. Unlike a C corporation, revenue produced by the S corporation isn’t subject to double taxation.
To receive your EIN number, we complete each form with our own EIN Assistance service. For customers with an SSN, it takes about 4 to 5 days. For customers without one, it may take as long as 5 weeks.Online EIN (Tax ID)