01.
Allows you to establish payroll and pay employment taxes
An S corporation, also known as an S Subchapter, refers to any type of corporation that has 100 shareholders or less and is taxed like a partnership. An S corp business entity is allowed to pass income, losses, deductions, and credits directly to shareholders, helping them avoid double taxation. The shareholders then report their income and losses on each individual tax return.
Unlike other business structures, an S corp isn’t legally required to have an S corp tax ID. However, there are several reasons why you should apply for an EIN for S corp, including:
An employer identification number allows your business entity to perform various essential business functions and is essential for federal tax purposes. Benefits include:
Allows you to establish payroll and pay employment taxes
Prevents identity theft by using the S corp EIN number instead of a social security number (SSN)
Makes it possible to continue operating even after losing S corp status
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