The process of obtaining a Tax ID/Employer Identification Number (EIN) is essential for businesses and involves completing Form SS-4 with the IRS. This EIN is crucial for various business operations, including opening bank accounts, applying for loans, and processing credit card transactions. It’s required for entities such as corporations, partnerships, estates, and trusts. Even if your business has no business income, you must still file a tax return for your entity type by its due date.
This is a phrase we hear a lot during the year. If you filed out an application SS-4 to apply for a Tax ID/Employer ID Number (EIN) from the IRS, this is used for identification of employers, usually required to open a business bank account, as well as loan applications and for accepting debit and credit cards. Corporations, partnerships, estates, and trust need an EIN.
The SS-4 letter shows the legal name of the entity, the person in charge of all legal matters for the business, address, business start date, and entity type. It will also include the forms your business needs to file based on the information you provided during the application process.
All these items are extremely important when “filing your taxes”. That start date is the date you told the Internal Revenue Service you opened your business. Even if you didn’t start doing business and making income you must use that date on your tax return.
The SS-4 letter from the IRS provides several key details:
“I had no income…” but you have established your business in the eyes of the IRS, so you still need to file a zero return for the entity type you filed for. A partnership and S Corporation have returns due on March 15 and a C Corporation is due on April 15. If you established your business entity as a partnership, you need to make sure that there are at least two people involved in the business. An C or S Corporation can be one shareholder.
Even if your business hasn’t generated any income, it’s still mandatory to file a tax return. The start date provided during the EIN application is critical and must be used in your tax returns. The deadlines for filing are:
Partnerships require at least two individuals, whereas C or S Corporations can operate with just one shareholder.
To “change your entity type”, you must go through the Secretary of State and using Form 2553 of the Internal Revenue Service. Form 2553 is due by the filing deadline of your current entity type and must be approved by the IRS. However, once your change has been approved, you can not make another change for 60 months.
