Every
business that is an LLC or is a Limited Liability Company in formation has to
apply for a tax id number to have its assets protected. The reason many
businesses choose to set up an LLC, is that the owners will be safe from having
their personal assets seized to pay off any debts that their company or
business has taken and could not be repaid.
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In case if the company is sued, and found liable of
wrongdoing, then the owners’ personal assets will remain protected, as long as
the owners are not personally involved in the wrongdoing. Wrongdoing such as
committing tax fraud, intermingling of personal finances and that of the
business, both the people involved and their personal assets will be held
accountable.
A tax
id number is needed for the Internal Revenue Service to identify the LLC
business in the company’s tax filings and any tax dealings with the agency. Any
LLC with more than one member or owner need to apply for tax id or an
employer identification number (EIN). This EIN is needed to fulfill the
company’s tax obligations.
To apply
for EIN, the business owner has to go through the process to fill up the
form through the Internal Revenue Service (IRS) website and once the
application has been processed, a nine-digit tax id number will be approved.
Once the number has been approved, the number can be used to open the business
bank account.
The
tax id number is used for opening business bank account, filing of taxes,
handling employee payroll, obtaining business loans, obtaining credit cards in
the name of the LLC, and also for applying for business licenses. Once a tax id
number is assigned, it will not expired and it will not need to be renewed.
The
IRS also requires the estate of a deceased to file an income tax return on the
income generated by the assets, and in this case the estate tax id is required to do so. The types of assets that could generate
income that are taxable include savings account, stocks, bonds, mutual funds
and rental property.