UR MONEY: Everything You Need to Know About Entities

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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 ownerโ€™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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