Everyone of us dreams of having our very own business especially in the United Stated of America as it is the American Dream! Do you know that there are 4 different types of business organizational structures in the United States, and one of them is the LLC also known as the Limited Liability Company? For you information, the limited liability company provides its owners liability protection against company actions and debts similar to a corporation. This means that you can own a business without the too much liability and cost. Its management can be set up as a corporation or partnership for management flexibility and taxation purposes.
Individuals, foreign entities, corporations or other limited liability companies can be members of a limited liability company. A limited liability company can consists of one or an unlimited number of members, and it enjoys the flexibility to convert into a corporation business structure as the company grows or expand. A corporation can also convert into a limited liability company. This flexibility really bodes well for the commerce and economy of the states.
Benefits of forming a LLC
A limited liability company can be managed as a partnership, or as a corporation. Its members are protected against the financial and legal obligations of a company. In case the company goes bankrupt or gets involved in a financial lawsuit, its members’ personal assets will not be seized. Hence entrepreneurs and dreamers will not be held back by the fear of such limitations. The cost of an LLC application is cheaper than a corporation.
When do you need to apply for a tax ID number?
1. If your limited liability company has more than 1 owner.
2. If your company employs employees.
3. If your company is a partnership or a corporation.
4. If you are paying income, taxes, or other wages to a non-resident alien.
5. If your company is involved with organizations that include trusts, non-profits, estates, etc.
A tax ID or an employer identification number is used to identify a limited liability company for tax purposes in the same way that a Social Security number is used to identify an individual.
First and foremost, in order to apply for a tax ID, you will have to identify your entity type. Then you will need to fill out the information on the simplified one page tax ID form (SS-4) together with a one-time federal filing processing fee. Within an hour of submitting your online TIN application through the Inland Revenue Service website, you will receive your tax ID number from the IRS. If you need any help with the tax ID application, you can submit your TIN application through the Gov Doc Filing website. It is easy and almost hassle free.
Once you received the tax ID number, you can use it to open your business bank account, apply for a business license in your state, and file a tax return by mail. Some banks will need the official letter from the IRS and this may take up to a month for the letter to arrive. Then again the overall process is really painless and convenient. If you plan to for your very own LLC in the states, do so with peace of mind.