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Your business needs an Employer Identification Number to have employees

Posted by Giselle Ayala Mateus | Jul 14, 2020 | 0 Comments

After a business is established, whether it is a corporation, a limited liability company, a sole-proprietorship, etc., it is necessary to take additional steps to hire employees and be in full compliance with the law. To hire employees, a business needs an Employer Identification Number.

An Employer Identification Number (EIN), also known as Federal Tax Identification Number, is a digit assigned by the Internal Revenue Services and used to identify a business entity. An EIN may be assigned to entities who ave employees and to others that don't. EINs are assigned to, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, and certain others.

To assign an EIN the IRS identifies the responsible party for tax purposes and assigns one number per responsible party. The responsible party is the true principal officer of a business, or a general partner, a grantor, an owner or a trustor, who controls, manages, or directs the applicant entity and the disposition of its funds and assets. In this particular case, only natural persons, individuals may act as the responsible party. The only special case where an entity is the responsible party is in the case of government agencies.

Before applying for an EIN an entity must have been appropriately created and organized. Although you may apply online, by fax or by mail, it is always advisable to get legal counsel in regard to all the compliance aspects of your business. If you have a question, or there is an issue of your interest you would like to address, feel free to write to [email protected] Additionally, Ayala Mateus provides legal research, consulting and counseling services focused on providing the answers clients need to make informed choices.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.

About the Author

Giselle Ayala Mateus

Giselle Ayala Mateus is a NY attorney with comprehensive experience in transactional law, creative agreements, business formation, and immigration law. She is also the founder of FOCUS a not-for-profit project focused on supporting entrepreneurs and artists.

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