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UR MONEY: Everything You Need to Know About Entities

  • June 26, 2018
  • 2 minute read
entities
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UR MONEY is a new a series that helps like-minded women learn more entrepreneurship and about putting their money to work! Are there any specific questions, you have about money? Email me and I’ll find an expert to answer your question!

What is an Entity Type?

For a company to succeed, the business owner needs to choose the right entity type. The business structure is determined based on the particular type. At IRS-EIN-Tax-ID, choosing the entity type is the first process in filing for an Employer Identification Number or EIN. By assigning the type of entity and filing for an EIN number, a business will then be ready to operate correctly, with the proper identification as well as entity classification.

Types of Entities

For the process of EIN filing, a business needs to be classified as an entity type. The types available include a sole proprietorship, limited liability company, corporation, and partnership. A sole proprietorship is a simple business type, with a simplified tax process. A partnership is similar to this classification but involves more than one business owner.

A corporation is another entity type available, one that involves protecting the business owner’s personal assets by creating a separate entity from the owner. Accounting for the business will be a little bit more tedious but taxes will be paid based on the company instead of the individual.

Another option is a Limited Liability Company. Also known as an LLC, this is an option a business owner can choose. The tax structure for this entity type can be one of a corporation or a pass-through structure.

A trust and estate will also require a tax ID. An IRS estate tax ID and trust ID will place a separate designation for this entity type, helping with tax filing needs. Overall, a Federal tax ID number is needed for an entity to successfully be identified by the IRS, file taxes and complete business needs such as opening a bank account, obtaining a credit card or loans.

Easily choose your entity type at IRS-EIN-Tax-ID and begin the process of obtaining an EIN.

 

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Danasiafantastic

Danasia Fantastic founded TheUrbanRealist in early spring 2013. She loves good cocktails, great conversation and doing what she wants.

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