Stupid Accounting Question & EIN ?

[wickchick]

This is probably a dumb question. I'm registering as a sole proprietor. The form is asking me for the closing month of accounting year. If I start the business in September, is the closing month of accounting year, the following September (2008)? Does anyone know? Sorry if this is an obvious question, I just want to get it right.

Second question...since I'm a sole prop, I can technically use my SS# for my EIN. BUT, what if I'm not comfortable with that (I know some businesses ask for your EIN and I really don't want to give out my SS#)? Can I register for an EIN? I don't have any employees, nor do I plan to. BUT, I may eventually register as an LLC depending on how things work out!

Thank you guys for taking the time to help me out. This board is such a great resource!

[Beth-VT]

It may vary a bit by your state but if you're a simple DBA (I am too), your accounting year should run Jan 1-Dec. 31, doesn't matter when you start your biz.

Yes, you'll use your SSN for your taxes, no EIN is needed unless you have employees. Chances are, what other businesses are asking you for is your tax ID #, also called a wholesale #, and a few other things. When you register with your states tax dept. to collect/remit sales & use tax, they will give you a number. When you purchase wholesale from another business, they will probably ask for that #, then they won't charge you sales tax, and you would do the same if you sell wholesale to someone. HTH.

[wickchick]

Thank you, Beth That is very helpful!

[jennifer]

To add a bit about the EIN. If you get one and don't really need it--no employees--you'll end up with more paperwork than you relaly need to be doing.

[wickchick]

Thank you. I think I was confusing the EIN with the Taxpayer ID #. Thanks for helping me clear this up! Who knew starting a business was so dang frustrating!

[summerbug]

Another take on the EIN - as you stated, if you plan to switch to an LLC in the future you will want that EIN - it is the equivalent to a business as a social security number is to an individual. With an LLC you want everything seperate so you won't want to use your social security number.

My accountant had one sheet I had to sign to apply for the EIN. Not much work on my end.

hope this helps ya

[debscent]

EIN & TIN are interchangeable. They are essentially the same thing. EIN/TIN is assigned by the IRS, your SSN is assigned by the Social Security Administration. No worries. It's the number the IRS knows you by. LOL!

[sudsnwicks]

wickchick, it's all right to have a short year for the 1st year. Most people do not time it so perfectly to start their biz in Jan. In theory you could use a sept-aug fiscal year, but as a sole proprietor, it would simplify things a lot if you just use the calendar year, since your personal taxes are done on a calendar year basis.

[wickchick]

Thank you guys! I put December as the closing month, and filed for my state license (not an EIN form). I appreciate all of you taking the time to give a fellow chandler some advice!