In this issue you'll find out why you need one and how easy it is to get one online. Keeping your social security number safe from unauthorized use is one of the best reasons to get an EIN.
President, Medallion Fulfillment & Logistics
by Jan Stewart, exclusively for Medallion Fulfillment & Logistics
If you own and operate a business, you may be required to obtain a Federal Employer Identification Number (EIN) and should consider doing so even if not required. Commonly referred to as a federal tax ID number, an EIN is like a social security number for your business.
Just as your social security number is used to identify you as a unique individual by government, financial and other institutions, an employer identification number is used to identify a business as a unique entity by government, financial, tax and regulatory agencies. Obtaining and using an EIN to identify your business to the Internal Revenue Service and the various federal agencies that regulate businesses is a smart way to separate and differentiate between your personal and business obligations and liabilities.
Issued by the IRS as a tax identification number, an EIN is a unique identifier assigned and tied to the individual owner of a specific business. EIN's are used by employers, sole proprietors, corporations, partnerships, non-profits, government agencies and certain other business entities. By using an EIN to identify their business, sole proprietors who have been using their social security number as both a personal and business identifier can create an important layer of legal separation and privacy between their personal and business affairs. Using an EIN rather than a social security number for business transactions prevents access to the personal information tied to your social security number.
An EIN provides the additional benefit of creating a continuous business identity even if the name, focus or location of your business changes. This allows business owners to capitalize on tax, financial or regulatory advantages developed in previous years. As long as business ownership and operating status do not change, your EIN follows your business through the inevitable cosmetic and directional changes that accompany the definition and growth of a business. You can use the same EIN even if you change the name or address of your business or add additional locations. However, because an EIN is issued to the specific owner of a business and not to the business itself, a change in ownership necessitates obtaining a new EIN.
A new EIN must also be obtained if the status of your business changes; for instance, if you incorporate your business or take on partners and begin operating as a partnership. A new EIN is also required when a business files for bankruptcy or establishes a profit sharing or retirement plan.
Despite its name, you do not need to be an employer to obtain an employer identification number. You are required to obtain an EIN if your business operates as a corporation or partnership or you offer taxable products or services, collect sales tax, have employees, withhold taxes on income, have a Keogh plan or file any type of federal tax return. However a business owner can apply for an EIN even if not required and will generally find it to his advantage.
An EIN is required on income tax forms, employment tax reports, social security records and tax payments and is required to apply for a business license. Most banks also require an EIN to open a business account.
The application procedure is simple and painless. While you can apply for an EIN by contacting your local IRS office and filling out form SS-4, online application is fast and easy. Available at www.irs.gov, the EIN application form can be completed online.
As soon as you complete the online application, you will receive your EIN and can begin using it immediately. Make certain you download, save and print the EIN confirmation page. Because it takes about two weeks from the date of issuance for a new EIN to be fully integrated into the IRS data base, business owners must wait two to three weeks before filing electronic returns or making electronic payments. The EIN is a federal identification number. While many states also use the federal EIN, some require state identification numbers.
About the Writer Jan Stewart
Jan Stewart is a professional writer for Medallion Fulfillment & Logistics, a family owned Los Angeles based fulfillment firm. She writes exclusively for Strategies for Success on topics of business tips, how to promote your business online, and establishing your brand in the marketplace.
We got there one step ahead of the sheriff! Alvin wasn't a client yet when he called us in a panic. He had recently moved his extensive inventory into a new fulfillment house and it had just gone belly up. The Sheriff was on his way to lock the doors and Alvin's business was in peril. Without his inventory, Alvin would be out of business.
We instantly rerouted some of our trucks and raced across town. Our fast-moving crews were able to load Alvin's stock and move it out before the Sheriff locked the doors. Most of that company's other customers weren't as lucky and their inventories languished for months in a warehouse they couldn't access.
Without missing a beat, our staff at Medallion cataloged and stored Alvin's considerable inventory, and we were able to start shipping orders in record time. Alvin was back in business quickly. Medallion got Alvin up and running again with no disruption to his business. He has been a satisfied customer ever since.
With Medallion Fulfillment & Logistics you'll never run into the kind of emergency Alvin experienced. Unlike many of our competitors who are new and untried in the business, Medallion Fulfillment & Logistics, a division of Medallion Enterprises, has been in the fulfillment business for 25 years. We're a financially-sound, well-respected, reliable firm staffed by family and long-term employees who look forward to the next 25 years of business and beyond.
Since he became a Medallion customer, we've managed to save Alvin thousands of dollars and help his business grow. A Ph.D., Alvin sells educational counseling videos and brochures which entail tremendous inventory. He sells from a catalog by mail and, quite unusual in this business, never embraced computers. Alvin does all his business by mail, telephone or fax. Due to our flexibility, Medallion has been able to work with Alvin and accommodate his business methods. We've used our state-of-the-art computer technology to help Alvin better track his inventory, expedite order taking and shipping, handle accounts receivable, maintain detailed accounting records, and significantly improve his business.
We've even been working with Alvin to transfer his inventory from its original VHS format to DVD to further increase his sales. Medallion has the capability to duplicate small DVD orders on demand from our customer's masters. As a full-service fulfillment house, we can assist you in managing and growing your business well beyond the traditional pick & pack, and shipping services offered by our competitors.
Medallion's relationship with Alvin is just one example of the extra mile we go for our clients. As a family-owned company we understand the problems and pressures our clients face. We've been there ourselves. When Alvin first called us, we understood the importance of acting quickly. On the strength of a phone call, we responded to the urgent needs of a fellow businessman and rushed to save Alvin's business. We took care of the contracts and legalities after we knew Alvin's inventory was safe. Now, of course, we wouldn't be practicing good business principles to do that every day of the week. But the point is, when you have an emergency, you can count on Medallion Fulfillment & Logistics to respond immediately.