What is an EIN and Why Do I Need One?

An EIN is a nine-digit number assigned by the IRS and used to identify your business. It’s like a Social Security number for your business and, in many cases, can be used in place of your Social Security number on forms and other types of paperwork.

We recommend that all businesses apply for and use an EIN..

If you are a sole proprietor, you need an EIN if you have any of the following:

  • Employees
  • A retirement plan,
  • Have or are planning to buy an existing business
  • You are a partnership, LLC, or PLLC

In addition, some states require you to have an EIN to open a bank account.

To apply for an EIN, the only information you need is the type of company your business or practice is. Applying for an EIN is an online process that, in most cases, will provide you your EIN on the same day you apply for it.

When applying, PLLCs should select the “LLC” option on the application. When you are done, make sure you SAVE a copy of the generated letter. It is the ONLY time you will get a copy without requesting it from the IRS.

TL;DR: You should have an EIN.

Team Member Spotlight : Michelle

Michelle is a CPA that works in the accounting side of our practice. She came over when we merged with Primarily Bookkeeping and she is a fantastic addition to our team.

Why did you decide to become an accountant?  

I chose accounting in college as a career knowing I’d always be able to find a job wherever I went. It was just my luck that I discovered a passion for it the more I learned.

When were you hired for TL;DR, or when did you start with Primarily Bookkeeping?  

I started working with Primarily Bookkeeping in April 2018 and then transitioned to TL:DR in August 2018.

What made you decide to want to work for TL;DR?  

TL;DR offers the opportunity to fulfill my passion for accounting combined with the flexibility to work from home and fit my work into my family life.

What do you enjoy most about TL;DR?

I love the opportunity to work with a wide variety of clients, each with their own intriguing uniqueness, and having a team to collaborate with.

What is a typical work day like for you?

There’s really nothing typical about any of my days. Because I homeschool my son while working, I have to stay flexible, keeping on top of the needs of my clients while answering my son’s never-ending questions. My “office” is my Surface Pro laptop, which goes with me everywhere. If I have a spare moment or receive an urgent email, I’m online and ready to work.

What is your favorite tip for small business owners?

Focus on what you know best about your business and let your trusted advisors deal with the paperwork details.

How do you stay informed about developments and changes in the accounting world?  

As a licensed CPA, I’m required to complete Continuing Professional Education and I make an effort to always find coursework that’s relevant and timely to the industries I serve.

What is your biggest achievement to date – personal or professional?  

That is definitely my family, my husband and son. I love my work and get a lot of joy from it, but there’s nothing like being a parent.

What do you do outside of work?

Some would say I’m never really “outside of work!” But when I’m not stealing a moment to post a journal entry or complete a bank reconciliation, I’m either teaching a homeschool lesson to my son or preparing for one.

Do you have any advice for those interested in entering the accounting field?

Pay attention to details because accounting is all about the details.

What is the Difference Between Being Self-Employed and a Small Business Owner?

Many people tend to use “self-employed” and “small business owner” interchangeably when discussing their business. At TL;DR, we refer to different types of clients as noted below:

  • Self-Employed: Works for themselves
  • Small Business Owner: Hires employees or independent contractors

I refer to TL;DR: Accounting as a small business, especially since our team has grown, but that doesn’t mean that if you have hired employees that you can’t refer to yourself as self-employed.

There is no tax difference between being self-employed or being a small business owner. The biggest dictator of your tax situation depends on how your business is formed, like making the S-Corp election.

TL;DR: Use whichever term feels like it fits your situation – we don’t judge.