The entity you choose when you form your business affects the way in which the IRS taxes your business, among other things. When you initially set up your business, it is important to take care to choose the right entity. You also want to make sure that you register the right type of entity with the IRS for tax purposes from the get-go when you apply for your EIN.
Mistake with Your EIN
When you apply for your EIN, you must include certain aspects of your business including the entity type. If you make any mistakes on your initial application for an EIN, you need to alert the IRS. Rather than filling out a new form, you must submit a letter. In this letter, you have to include the tax ID number, the complete name of your legal business entity and the mailing address. Additionally, detail what information needs to be changed.
If you make a change to your business entity, you would need to file the changes and inform the IRS. The type of changes you make depends on what needs to be done.
The Wrong Entity on Your Tax Return
If you have an EIN with the right entity type but then file your taxes using the wrong entity type, you can make a change before it becomes a problem. You will need to alert the IRS and fill out a form for amending an income tax return. You do not have to refile your entire tax return; instead, you just need to update the incorrect part. You also need to include contact information if the error means that you will receive more money. If you have to pay additional money, be sure to include that with your amended return or else you might face penalties and interest fees.
Before you apply for EIN, review your business paperwork to ensure you fill out the paperwork correctly. If you are unsure whether your EIN number is valid, you can use an EIN number lookup tool. Contact IRS-EIN-Tax-ID Filing Service for support in getting your tax ID number.
Like Us? Sign Up!
Subscribe to Kids Ain't Cheap and get our latest content via email.