formers are corporations. Discuss your accounting method with your accountant, and be
sure they explain the positives and negatives of each for your business.
Obtaining an Employer Identification Number (EIN)
U.S. citizens have Social Security numbers (SSN) that are used to identify them for tax
purposes and a variety of other matters. Businesses have employer identification numbers
(EIN). EINs are used by employers, sole proprietors, corporations, partnerships, non-
profit associations, trusts, estates of decedents, government agencies, certain individuals,
and other business entities. Think of it as an SSN for your business.
Applying for an EIN is easy and free. It can be done several ways, but the online ap-
plication is the preferred method. Visit http://www.irs.gov for more information and to apply
online. You can also download a PDF of Form SS-4 and complete the application by mail
or fax. Application by phone is yet another method. Contact the toll-free business and
specialty tax line at (800) 829-4933 between the hours of 7:00 a.m. and 10:00 p.m. local
time, Monday through Friday. An assistor takes the information, assigns the EIN immedi-
ately, and provides the number to an authorized individual over the telephone.
Planning for Income Taxes
Businesses are responsible for filing income taxes on a quarterly basis, commonly called
quarterlies. These are estimated tax liabilities and are usually based on the previous year’s
tax bill. Although paying taxes on a quarterly basis is more digestible for many small
business owners, since it’s a smaller amount that paying an entire year’s worth of taxes,
the IRS sees income tax payments for business as, more or less, a pay-as-you-go proposi-