When you make the decision to go into business, you must get a Federal Tax Identification or Employer’s ID Number (EIN) from the Internal Revenue Service (IRS). Your EIN is much like the identification a Social Security Number provides to an individual. Virtually every registration you would make for your business requires your EIN number. When you register your business with your state, you must have an EIN. If you want to establish a credit file for your business with Dun and Bradstreet, you must have an EIN. If you wish to participate in small business set-aside programs, you must have an EIN. Since the passage of the Patriot Act, you must have an EIN to open a bank account.
A corporation is an artificial person created by law. It has many of the rights of a tax paying individual. Corporations are frequently used in the United States. Virtually, every large enterprise with stock traded on any stock exchange is a corporation. Corporations may have multiple classes of stock representing ownership. The two classes of stock are common and preferred shares. Corporations must file articles of incorporation in their home state. Some states also require that bylaws be filed as well.
Registering to be a corporation or LLC is not enough
Many people think incorporating their businesses or using a limited liability status for their companies protects their personal assets.. You may think you are finished, when you apply for an EIN, and file articles or an operating agreement with your state. Feeling that will take care of your organizational issues. But if you fail to meet the ongoing compliance requirements of your organization, you can lose your limited liability status. And, even have courts to pierce your corporate or limited liability veil of protection. This could lead to the award of your personal assets to a plaintiff in a law suit. Especially, if your company assets do not cover the judgement amount in a legal action.