- Date : 17/09/2023
- Read: 3 mins
Want a unique identification for your business and make it a unique legal entity? Know about EIN, its benefits, and the process of getting one.
What is an EIN for a business?
An Employer Identification Number (EIN) serves as a unique identifier assigned to a business entity for recognition by tax authorities. This numerical code is employed primarily for tax reporting purposes. Typically comprising nine digits, however, in India, it consists of eleven digits and is commonly referred to as the Taxpayer Identification Number (TIN).
EINs are used by entities like employers, sole proprietors, partnerships, corporations, government agencies, trusts, non-profit organisations, legal heirs, freelancers, as also several other business entities. Once a business is allocated a TIN, it becomes a registered dealer, enabling it to sell goods. TIN is a crucial component, as it must be included in all invoices issued by the company, and in some cases, provided to the seller. Furthermore, it is obligatory to mention TIN when conducting sales at the state or interstate levels. All dealers are required to include their TIN on both sales and purchase documents as a mandatory practice, as stipulated by law.
Highlights:
-
EIN is referred to as TIN in India and comes with 11 digits
-
TIN must be included in all invoices issued by the company
-
TIN is crucial for conducting interstate trade and collaboration with other entities
-
It allows one to conduct business legally and fulfil the required tax obligations
Also Read: Quickly look at the income tax calendar for 2023
Benefits of EIN
Obtaining an Employer Identification Number (EIN) offers numerous benefits for businesses. It establishes a distinct identity for the organisation, enhancing its credibility and professionalism. EINs are essential for tax reporting, facilitating accurate and organised financial record-keeping. They also enable businesses to hire employees legally, open business bank accounts, and apply for the necessary licenses and permits. Moreover, having an EIN simplifies the process of securing business loans and credit, while also safeguarding personal privacy by separating business and personal finances. Additionally, it's crucial for conducting interstate trade and in collaborating with other entities.
How to get free EIN?
In India, one can obtain a free Employer Identification Number (EIN), also known as a Taxpayer Identification Number (TIN), by applying through the website of the Income Tax Department of India or a designated portal, where you'll find the application form for TIN registration. Fill out the required details accurately, including your business information and financial data. Attach any necessary documents, such as PAN cards or proof of address. After submission, the tax authorities will process your application, and upon approval, they will issue your TIN, allowing you to conduct business legally and in fulfilling your tax obligations.
Conclusion:
While obtaining an EIN or TIN is relatively simple, understanding its significance and proper usage can significantly benefit businesses in managing their financial affairs and complying with tax regulations.
Click here for the latest articles on Tax Planning
Also Read: Don’t panic if you get an income tax notice
