Everything You Need to Know About Getting a Tax ID Number in Chicago
Getting an EIN: A Vital Step for Business Set-Ups4 min read
When it comes to setting up a business properly, one of the most important steps is getting a tax identification number (also known as an Employer Identification Number or EIN). Getting an EIN is the foremost requirement of conducting business of any kind in the US. In Chicago specifically, having an EIN is essential for businesses of all sizes, from sole proprietorships to Fortune 500s. But how do you go about getting a tax ID number in the city?
This guide explains the process for obtaining an EIN in Chicago, and covers topics such as the legal implications, the documentation needed, the types of entities that require an EIN, and the benefits of having one. Additionally, it is important to consider the legal implications of obtaining a tax ID number in the city, so we’ll also cover some of these common questions and discuss how best to ensure compliance. By the end of this guide, you’ll have a better understanding of the requirements and options available to get a tax ID number in Chicago.
What is a Tax ID Number?
A tax ID number, also known as an Employer Identification Number (EIN) is a nine-digit number assigned by the IRS that identifies your business and is used for filing taxes. Every business, from a sole proprietorship to a large corporation, needs this number to interact with the IRS. It is also used when opening a bank account, filing taxes, and applying for certain types of licenses.
An EIN is not the same as a Social Security Number (SSN), which are numbers used by individuals to report taxes. Companies must have an EIN since individuals in most cases can’t file business taxes under their SSN.
Types of Entities That Require an EIN
There are various types of businesses that require an EIN. If you are an employer in any capacity, then you will need an EIN. This includes businesses such as:
• Sole proprietorships
• Limited liability companies (LLCs)
• Non-profit organizations
• Any business with employees
• Economic Development Organizations
If you are starting any of these types of businesses in Chicago, you will need to obtain an EIN in order to file taxes.
Documentation Needed to Apply for an EIN
To apply for an EIN in Chicago, you will need to provide certain documents such as proof of identity and proof of business formation. Depending on the type of business, your documentation could include:
• Proof of Identification: Photo ID, such as a driver’s license, passport, state-issued identification card, or Social Security cards.
• Business Formation Documents: Articles of incorporation, LLC operating agreement, Partnership Agreement, etc.
• Business Documents: Business licenses and/or permits, banking information, business contracts and/or agreements, etc.
You must have all of the necessary documentation before you apply for your EIN.
How to Get an EIN in Chicago
In order to get an EIN in Chicago, you must first determine what type of business entity you have. Once you have determined what type of business you have, you will need to file the necessary paperwork to form your business. Once that is completed, you are ready to apply for an EIN.
The EIN application is an online process that can be completed with the IRS website or through an IRS-authorized service provider, such as UpCounsel. You will need to provide the necessary documents in order to apply. Generally, the process takes up to 3 weeks, but can be expedited if needed.
Legal Implications of Obtaining an EIN in Chicago
Once you have obtained an EIN for your business in Chicago, there are certain legal implications that you should be aware of. For example, your EIN will be listed as the responsible party on any contracts, agreements, and/or documents relating to your business. This means that you are assuming any risk associated with the business and any employees you may have.
Additionally, you may be held liable for any losses incurred by your business. This means that if your business fails, you could be held financially responsible for any debts. To ensure that you remain compliant with the law, it is important to consult with a knowledgeable attorney who can help you understand your legal obligations as a business owner.
Benefits of Having a Tax ID Number
Having a tax ID number in Chicago is essential for conducting business in the city. Not only will it make filing taxes easier, but it will also open doors to financial opportunities that would otherwise not be available. Your EIN will show potential lenders and investors that you are serious about your business and can be trusted to fulfill any contractual obligations.
Plus, there are certain tax deductions and benefits that are available only to businesses that have an EIN. These deductions can help reduce your business’s tax burden and help you save money.
Having a tax ID number is an important part of starting any business. In Chicago specifically, there are certain legal implications associated with obtaining an EIN that you must be aware of, as well as certain documentation that you must provide when you apply. Additionally, having a tax ID number can open up opportunities to financiers as well as tax benefits that are only available to businesses with an EIN.
By consulting with a knowledgeable attorney, you can make sure you understand the legal implications of obtaining an EIN in Chicago. UpCounsel is an online platform that connects businesses with experienced legal counsel, providing businesses with the resources they need to get a tax ID number in the city.