5 Things to Consider When Getting an EIN in New York
Getting an Employer Identification Number (EIN) for Your New York Business from the Internal Revenue Service (IRS)2 min read
When starting a business in New York, one of the important steps is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is a unique nine-digit number used to identify a business for tax purposes. Before applying for an EIN, there are five important things to consider.
1. What Is an EIN and Why Is It Needed?
An EIN is a federal tax identification number used for filing business tax returns, opening a business bank account, hiring employees, and other business-related needs. Having an EIN is essential for most businesses, but certain types may not need one. For example, if you are operating a sole proprietorship and do not pay any employees, then you do not need to obtain an EIN.
Obtaining an EIN is also recommended for businesses that plan to bring in more than $50,000 of annual revenue and/or have more than one employee. Additionally, some banks may require an EIN in order to open a business account. It's important to consult a business attorney to determine if an EIN is necessary for your particular business.
2. Applying for an EIN
The application for an EIN requires specific business details, such as business name, business type, business structure, address, mail and telephone contacts, and owner(s) information.
Business owners can apply for an EIN online through the IRS website; however, the process can be complex and confusing. Moreover, the requirements for applying for an EIN in New York may differ from other states, so working with a business attorney who is familiar with the local regulations is the best course of action.
3. Other Important Documents to Secure
In addition to obtaining an EIN, there are other important documents to secure, such as the Federal Tax Identification Number, Business Bank Account, Sales Tax Permit, and Certificate of Authority. Depending on the type of business, additional documents may be needed to comply with federal and state regulations.
New York has specific regulations and requirements, such as the Certificate of Authority if the business is operating outside of the state. Consulting with a business lawyer who understands the legalities and requirements of doing business in New York is the best way to ensure all necessary documents are obtained.
4. Notifications to File with the IRS
Businesses are required to notify the IRS when certain changes are made, such as change of address, change of contact information, and change of ownership.
Failure to file these notifications can result in penalties and fines, so it’s important to recognize when they are needed and ensure they are sent to the IRS. Consulting a business attorney is the best way to ensure all necessary notifications are sent.
5. Staying Up-to-Date with Changes and Regulations
The laws and regulations governing businesses in New York are subject to change, so it’s important to stay current on any updates. Failing to comply with these changes can result in significant penalties and fines.
In order to stay compliant, businesses should consult with experienced business attorneys who are familiar with the local regulations and can advise the business on the necessary changes in order to remain in compliance.
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