As an entrepreneur, you want your new enterprise to succeed, but it can be challenging to figure out if and when that will happen. As such, your circumstances when you start out can be much different than your prospects after you’ve started your company. In many cases, the entity type you chose to begin your new enterprise won’t be able to support a growing infrastructure. Therefore, as your company grows, you may need to get a unique Tax ID, such as a Virginia EIN. Let’s see when this will be necessary.
Changing Entity Types
When you first get started, you can operate your company as one of four different entities:
- Sole Proprietorship: No other business partners or employees
- Partnership: Two or more associates share responsibilities
- LLC: Any number of shareholders can operate the business, but none of them can leave
- Corporation: The company is a separate legal entity from any operators or founders
So, at first, you may have created your company as a partnership or an LLC, only to switch to a corporation once things got more successful.
If you have to change the entity class for your business, then you will have to obtain a new Tax ID. This is because the old number is tied to the original entity, so it can’t be rolled over, so to speak.
Expanding Your Business
On the other hand, perhaps you had the foresight to form a corporation or LLC to begin with, which enabled you to grow and thrive without having to change entities. However, you are adding more offices and locations to your company umbrella. Is a new EIN lookup required?
In this instance, probably not. As long as you are still operating as the same entity, under the same name, you won’t need to obtain a new EIN. However, if you do any of the following, you will:
- Incorporate a subsidiary
- Merge with another corporation
- Obtain a new business chapter from the Secretary of State
Bottom Line
An employer ID number is simply a way for the IRS to know how to tax your business. Thus, it’s necessary to get one for each separate enterprise you create, even if it’s just switching from one entity type to another.
Getting an EIN is not too hard now. Today, with technology getting so advanced you can search for everything online and seek best help. Applying for EIN is also possible online and is easy too. Without wasting much time and energy you can apply for EIN online and get the job done within no time. Learn about it and then go for it in order to get the things in the right manner.