What Is The Difference Between A CID And EIN For Businesses?
Many industries have developed an “alphabet soup” of acronyms that make perfect sese to industry insiders but are utterly incomprehensible to anyone outside the occupation. Just listen to two people with federal jobs refer to the federal agencies with which they deal in the course of your work, or try reading your own medical charts. Entrepreneurship is not the most jargon-laden profession; in fact, you may pride yourself on how easily you can communicate your business idea to the public in plain language. Even with the most straightforward business strategy, though, you must obtain and keep track of several different identification numbers for your business. It only gets more complicated from there, so it is a good idea to discuss matters of incorporating your business with a Washington DC small business lawyer; this way, you can avoid an unnecessarily high tax burden and lots of other costly hassles.
So Many Identification Numbers for Businesses
Incorporating a business means legally bringing it into existence. Before you do this, you must decide on a business entity type, such as corporation, S corporation, partnership, sole proprietorship, or limited liability company (LLC). Which entity type you choose affects the rules about taxation and reporting of your company’s activities, and once you have established the business, it is very difficult to change the entity type. Therefore, it is very important to discuss your choice of entity type with a small business lawyer before you file the paperwork to incorporate the business.
When you incorporate the business, the office of the Secretary of State will issue you a company ID (CID) number for the business. How long the number is varies according to the business entity type. For a corporation, the CID is the letter C followed by seven digits, such as C0123456. For LLCs, it is 12 digits, of which the first four digits are the year the business was incorporated, such as 202178901234.
A CID is sufficient to do the preliminary work needed to get a business started, but soon you will also need to apply for another ID number. Before your business can begin taking in income or paying employees, it will need a taxpayer identification number which, in the case of businesses, is called an employer identification number (EIN). Regardless of your business entity type, the EIN is nine digits long, with a dash between the second and third digits, such as 56-7890123. The EIN functions as a social security number for your business, but in contrast to a person’s social security number, there are instances where you must share your EIN or even enable the public to search for it so they can refer to your business on official documents.
Let Us Help You Today
Small mistakes when establishing a business can be costly and time-consuming to fix. A small business lawyer can help you avoid these mistakes, thereby sparing yourself a lot of stress and expense. Contact Tobin O’Connor Concino P.C. for a consultation.