EIN instead of SS … basics

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  • June 12, 2013 at 2:50 pm #10319
    angopop
    Participant

    I’ve been looking for a thread here about the benefit of using an EIN instead of a Soc Sec number (that way your SS # isn’t going out to a million places) … but I haven’t been able to find that discussion by doing a search.

    Does anyone know if I need to be a business (dba or business license, etc..) to be able to use an EIN, or can anyone get an EIN? And if so, do you have a business account at your bank to keep all this separate? I live in Los Angeles, I know the rules are different depending where in the US you live.

    Right now I don’t make enough money from libraries so it doesn’t make sense to start a business, but in the long run, perhaps…

    What do you guys do?

    June 12, 2013 at 3:16 pm #10320
    Art Munson
    Keymaster

    I have an EIN (employer identification number) and am in the L.A. area. You need a separate entity for federal tax purposes. Mine is an LLC and in Calif. it’s $800 per year. I always use the EIN when I can.

    June 12, 2013 at 4:03 pm #10321
    Mark_Petrie
    Participant

    We have one but that’s because we have a corporation. I think (maybe wrong about this) you need to at least be a registered partnership, LLC or corp. You really should ask a qualified accountant about this stuff.
    Here’s a link from the IRS: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Do-You-Need-an-EIN%3F

    June 12, 2013 at 4:53 pm #10323
    Art Munson
    Keymaster

    I got one about a year and a half ago with no problem. I’m in Missouri, but I don’t recall where one lives making a difference. I applied as a sole proprietor; under “Principal products/services” I put “Music Composition”. Under “Reason for Applying” I chose “Starting a new business”.

    I was actually surprised at how easy it was. Check the IRS website for information on how to do it.

    I’m really glad I have it. It takes the trepidation out of submitting forms that require your SS number.

    June 12, 2013 at 7:08 pm #10325
    angopop
    Participant

    Thanks, that’s all helpful.

    At what point in your library music careers did you guys create an LLC or a corporation?

    I’d like to not hand out my SS to all the music libraries, but I don’t feel that I’m ready to create an LLC and spend $800 per year…

    June 12, 2013 at 9:56 pm #10329
    Mark_Petrie
    Participant

    Once you make over $100k a year, the general consensus is that the tax benefits of incorporating outweigh the fees and accounting costs.

    June 12, 2013 at 10:12 pm #10330
    Art Munson
    Keymaster

    I don’t think you need to make $100k a year to benefit. An LLC (Limited Liability Company) is much easier to deal with than a corporation.

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