Sunday, October 14, 2018

What Does an LLC with a Tax ID Number Protect You From?

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.

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