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Do I Need An EIN For A DBA?

Do I Need An EIN For A DBA?

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Do I Need An EIN For A DBA?

Starting your own business can be exciting, but it also means you’ve got to sort out some important details. One question that you may have is, Do I need an EIN to register my DBA (Doing Business As)?

Here, I’m going to help you figure out if getting an Employer Identification Number for your DBA is something you need do.

When Is an EIN needed for a DBA?

In short, a DBA is a name registration, and an EIN is a number that is assigned to a business by the IRS. To get to the answer of whether you need an EIN when you have a DBA depends on how your business is set up.

There are four main business structures (also referred to as a business entity) that someone will choose when starting a business. These include:

Sole proprietor: This is the default business structure for most people.

If you’re running your business as a sole proprietor and don’t have employees, you would commonly register for a DBA, but might not need an EIN. Instead, you can use your Social Security Number (SSN) for taxes and other official stuff. Some people will still get an EIN as the bank may require one for a business bank account or to help keep your SSN private.

General partnership: A general partnership, which is kind of like a sole proprietorship with multiple owners, is required to get an EIN.

Corporation: If your business is structured as a corporation, you have to register a unique business name with the state when setting it up. Because of that, a DBA isn’t often needed, though an EIN is required for all corporations.

Limited Liability Company (LLC): Things get a bit more complicated with LLCs. Like a corporation, an LLC registers a business name with the state, but if your LLC is just you (a single-member LLC) and has no employees, you aren’t required to get an EIN, and instead, use your SSN just like a sole proprietor. If your LLC has more than one owner (multi-member), has employees, or chooses to be taxed like a corporation, you will need an EIN.

What is a DBA?

A DBA, short for “Doing Business As,” is a name a small business can use that’s different from its official, legal name. It’s like a nickname for your business. This can be really useful if you want a name that’s more catchy or one that better describes what your business does, instead of using your own name or a more formal business name.

So, let’s say Tom Smith is starting a business and wants to name it “Smith’s Catering Services.” To do this legally in most states, you would need to register before it can legally be used. Depending on the state a DBA name can be called a Trade Name, Assumed Name, or Fictitious Business Name.

Related: How to register a DBA

What is an EIN?

Next, let’s look at the EIN, which stands for Employer Identification Number, or can be referred to as an FEIN, Federal Employer Identification Number, or federal tax ID. It is a 9-digit ID number that the IRS (Internal Revenue Service) issues to businesses, similar to how the Social Security Number identifies people.

There is no cost to get an EIN when registering through the IRS.

Related: How to get an EIN

Is an EIN required for a freelancer?

If you work for yourself as a freelancer or independent contractor and are a sole proprietor without employees, getting an EIN is optional. In this scenario, you can use your Social Security Number (SSN) for tax and business purposes.

If you decide to form a general parnership, corporation, or LLC, or are a sole proprietorship with employees, an EIN is required.

Does an EIN keep my personal and business finanaces separate?

As a sole proprietor (with a DBA or not) having an EIN does not separate your personal and business finances. This is because as a sole proprietorship the owner and business are legally the same entity.

The only way to separate your business and personal finances is to form a corporation or LLC.

Do I Need An EIN For A DBA?

Do I Need An EIN For A DBA?

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