Requirements for Registering a DBA and Obtaining an EIN
You should register a DBA if you have more than one employee, pay excise taxes, or file articles of incorporation. If a sole proprietor named Joseph Jones uses the DBA “Joe’s Taco Truck," he can register his business with a Social Security number (SSN). But if Joseph expands into a multi-person business, he’ll need an EIN to operate under his DBA.
In general, you need an EIN for a DBA if:
- Your business has more than one employee (not including contractors).
- You file articles of incorporation to restructure as a corporation.
DoDBA Need Separate EIN
Many companies need an EIN for tax payments and returns, the necessity depends on the legal structure and growth plans of the business:
-
Sole Proprietor: If you’re a sole proprietor operating with a DBA, you may not need an EIN, but it could be beneficial for separating business and personal finances.
-
Partnership or Corporations: Partnerships or corporations typically already have an EIN.
Your DBAs are just business nicknames and do not require a separate EIN. The necessity of an EIN depends on the business’s organization and tax obligations.
Obtaining an EIN and DBA Registration
You may need an EIN for various reasons such as banking, hiring employees, and tax compliance. A single EIN is usually sufficient for all your business activities, even if you have multiple DBAs.
Benefits of Having an EIN
An EIN is crucial for identifying a business entity for tax purposes. While many businesses require an EIN to operate, some exceptions exist. Having an EIN can be advantageous for growth and compliance even if not mandatory.
DBA Registration Process
You must submit a DBA application with details like the desired DBA name, legal business name, EIN, and tax IDs. The procedure and fees for registering a DBA vary by state and business structure.
DBA with IRS and State Entities
DBAs do not have a separate tax classification. While not mandatory to register DBAs with the IRS, they need to be reported on tax forms. Registering DBAs with state and local entities may also be necessary.