Does your business have a social security number?

If you are a business owner, that number is called your tax identification (TIN) or employer identification number (EIN). This number is used to identify your business just as your social security number identifies you as an individual. If you have any employees, this number will also show up on their tax records as the identifier for your business. You will use this number to open bank accounts, apply for credit and on any other application that requires your business's identity to be verified.

Because many small business owners are often sole proprietors, they forgo establishing an EIN and use their social security number. Although your assets and liabilities are one and the same, the problem is - you have to use your personal social security number more often. By now, we have all heard about the dangers of identity theft so can imagine that each time you use your personal social security number you are increasing your chances of having your identity compromised. All business owners are allowed to apply for an EIN through the Internal Revenue Service (IRS) at no charge. If you are a sole proprietor, you may only have one (1) EIN no matter how many businesses you have. The application is called an SS4 and can be filled out online (http://www.irs.gov/) or you can print and mail it.

New business owners should obtain this number after you decide on a name and legal structure of your business. If you are an existing business and currently using your social security number as an identifier, you can still apply for an EIN but you will need to change the number on all of your bank accounts, credit accounts and accounting paperwork. Although this may seem like a tedious task, imagine the consequences of someone stealing your identification because you didn't take the time to mind your business.