Your EIN number (employer identification number or business tax ID) is a unique nine-digit number that you use when filing taxes for your nutrition practice. With your EIN, you can establish your nutrition practice as a business entity, open a bank account for your practice and file taxes separately from your personal taxes. Establishing this clear distinction between your personal life, and your business provides many benefits and will help you run your practice efficiently.
Applying for an EIN is simple, and can be done online in only 10 minutes through the IRS website. If you’re just getting started in your private practice, don’t fret. You’ll only need your social security number and some basic information about your business (such as the name, business address, and whether you plan to hire additional employees).
In this article, we’re covering the basics of creating an EIN for your nutrition practice, including:
- What an EIN, LLC, and sole proprietors are
- Why it’s important your nutrition practice should have an EIN and what you can do with one
- Steps to complete in an EIN application under 10 minutes
- Building your business from there
Choosing your business structure when filing for an EIN
Not all business structures require an EIN to operate. In general, if you’ve established your nutrition practice as a sole proprietorship, LLC (limited liability corporation) or a corporation, you’ll most likely need to file for an EIN.
Most nutrition private practices choose to setup their business as a sole proprietorship or an LLC, and you’ll have to select one of these options when applying for your EIN. Meeting with a business attorney and accountant can help you choose the right legal structure for your practice.
LLC versus Sole Proprietor: What’s the difference?
The majority of new nutrition practices (especially if you’re a solo practitioner), will seek to establish their practice as either an LLC or a Sole Proprietorship. Although they may seem similar, it is best to choose the business structure that will work for your practice in the long-run.
- Sole proprietorship, also recognized as an individual or entrepreneurship, is a type of entity that is fully owned and run by only one individual. Accordingly, there is no legal distinction between the owner and business entity. This is why a lot of businesses prefer to form an LLC over a sole proprietorship. Sole proprietors report their income on their own individual tax return.
- LLC: Formed by an individual or group, business owners in an LLC have a lower level of liability. There is an added legal protection of an LLC that prevents any creditors from taking hold of the business owner’s assets since this business is structured under state laws. If you do not create a LLC, then your personal assets (bank accounts, home, etc.) may be vulnerable to creditors.
How to complete your EIN Application in 10 minutes
Once you’ve decided how you may want to establish your business, you can start your EIN application. Filling out an EIN application with the IRS is convenient, and can be done online in about 10 minutes. You won’t be able to save your progress, so be sure to have the time set aside to complete the application in one sitting. There are no fees to file through the IRS online EIN application portal, and you’ll receive a confirmation number with your new EIN at the end of the session. Note: even though you’ll be using an online portal, the IRS EIN system can only be accessed Monday-Friday 7am-10pm EST.
Here is a walk through of the basic steps required to complete your EIN application:
Step 1: Identify what type of legal structure is applying for an EIN
- This can be anyone from a sole proprietor, corporation, LLC, to trusts.
- Choose one of these legal structures and continue from there. The steps change as you choose a different legal structure, organization, or entity.
- As mentioned above, as a nutrition professional, you’ll likely be establishing your business as a sole proprietor or LLC, but legal consult is advised.
If you choose sole proprietor or LLC, you will then be asked to select a reason why you’re obtaining an EIN. The most likely choice will be “started a new business,” unless you already have an established practice that’s operating without an EIN or you’ve decided to expand your business by hiring a new employee. Both sole proprietorships and LLCs can legally hire employees.
- Started a new business
- Hired employee(s)
- Banking purposes
- Changed type of organization
- Purchase active business
Step 2: Provide your information for verification
As a sole proprietor, your business will be established under your name directly and the name must match with IRS records. Your EIN will link your sole proprietorship directly to your name and social security number. You’ll still be able to provide a trade name or “doing business as,” name, which will allow you to list another name that you/your practice operates under. For example, your sole proprietorship is linked to you as “Jane Kendall” but your can list your trade name as “Jane Kendall Nutrition.” Note: when filling out your name or trade name, do NOT include any endings like Inc, Corp, LLC.
Step 3: Provide a business address
No matter what type of business that you have, you’ll need to list a business address. The address must be in the US and cannot be a PO Box. You’ll be asked later to list a mailing address if it differs from your business location. If you work remotely, as with a virtual nutrition practice, you’ll want to list your home address, or the location where you do your remote work.
Step 4: Answer additional questions related to excise tax filings
The details section includes several YES or NO questions related to gambling, manufacturing and other industry-related businesses. Read them carefully, but most likely you will answer NO to these questions. You will also likely not need to file Form 720 (Excise Tax Return) unless you answered YES to any of the questions.
If you plan to hire an employee in your practice within 12 months of obtaining your EIN, and they will likely be paid more than $600 in the year, then you will want to select YES to the W2 question. The system will prompt you to do some additional filing.
Step 5: Choose how you want to receive your EIN confirmation
In the final step, you’ll have the option to choose whether you want to receive your confirmation via email or letter. If you select mail, you’ll need to allow up to 4 weeks for delivery. If you select email, the next screen will display your EIN number and some additional important information.
What’s Next? What you can now do with your EIN:
After your EIN is permanently approved by the IRS, which might take up to two weeks, you can successfully download IRS forms, publications, and tax returns.
One needs a federal tax ID to operate in the business world to eventually (but are not limited to):
- Pay business taxes
- Form a corporation, LLC, or partnership
- Start a business line of credit
- Open a business account
- Pay one or more employees
What if I change the structure of my business?
If the opportunity arises, and you want to adjust your business from a sole proprietorship to a LLC or any other entity, you would need to get yourself a new EIN for legal purposes. This is because the structure and/or ownership has transformed into something new. If you desire to pursue this new opportunity, no need to fear the modification of your business because you’re afraid of the process of acquiring a different EIN. Remember, it’s a simple ten minute application!
Yet, you don’t need a new EIN for smaller adjustments like changing your business name or adding a new business location. Lastly, if you need to replace your EIN in case you lose it, there are places to look up this important number such as contacting the IRS for immediate assistance or you can find it on old tax papers.