All business owners need to learn about the importance of business identification numbers. Registering your business and making it identifiable to the IRS is key to ensuring your business is recognized as legally organized.
All businesses need to have a business identification number, and in this blog post, we will discuss what it is and the process of obtaining one. We will also discuss the importance of business identification and how it can help your business grow!
What’s a Business Identification Number (BIN)?
A Business Identification Number (BIN) is a unique identifier assigned to businesses by the government. It is used to track businesses for tax and regulatory purposes. The BIN is also sometimes called the Employer Identification Number (EIN).
The BIN is used to identify businesses for tax and regulatory purposes. It is also used to track businesses for marketing and research purposes. Infrastructure and solutions are important for any business or enterprise. It is a simple, easy, and secure way to manage your business information.
The Importance of a BIN
BINs could be described as the social security number of businesses. They are extremely important, and each number is unique for every business. Let’s take a look at why these numbers are so important for businesses to have:
It makes your business easily identifiable: This number allows businesses to be quickly and easily identified by government agencies, banks, and other businesses.
It can help you obtain a good credit rating: This number serves as a way for creditors to assess your financial stability and history. If you have a strong credit rating, it will be easier for you to get loans or lines of credit in the future. This can be very helpful if you ever need to expand your business or make major purchases.
It helps you file taxes: The IRS uses BINs to process and track business tax information.
It allows you to open a bank account: To open a business bank account, you will need a BIN.
It makes it easier to get insurance: Many insurance companies use BINs to identify businesses they insure.
They can be used to apply for licenses and permits: Most government agencies require businesses to submit their BIN when applying for licenses and permits.
Now that we know why BINs are so important let’s look at other factors that require you to have a BIN.
When Does The IRS Ask For A BIN?
The IRS may request a BIN for many reasons. The most common reasons are:
Businesses filing their taxes: If the IRS does not have a BIN on file, they will send a notice to the business owner requesting the information.
If there are discrepancies in tax filings or the business owes money to the IRS: The IRS will contact the business and request a BIN to resolve the issue.
When businesses apply for an Employer Identification Number (EIN): The IRS will use the BIN to process the application.
You will be required to provide your BIN to the IRS as it is used to determine tax obligations. However, sole proprietor businesses – a business owned and operated by one person – won’t always need to get a BIN, except for:
- Businesses with Keogh plans (tax-deferred pension plans)
- Businesses filing excise tax forms (tobacco, alcohol, firearms)
- Businesses that have one or more employees
When Do You Need A New EIN?
There may be times when you will need to obtain a new EIN. The factors for getting a new one include:
- Your business structure changes.
- You change your business location.
- Your business name changes.
These are just a few examples, so check with the IRS for specific instructions regarding your business. Applying for a new EIN is a relatively simple process that can be completed online, by fax, or by mail.
Applying For A BIN
Let’s take a look at what you need to know about applying for your BIN:
- The first step is to obtain the proper form from the IRS. The most common form is the SS-4, which can be easily found on the IRS website.
- After completing and signing the form, you will need to submit it to the IRS. This can be done online, by fax, or by mail.
- Once your application has been processed, you will receive your new EIN in the mail.
Keep this number safe, as you will need it for various business transactions such as hiring employees and filing taxes.
There are some requirements to apply for a BIN, so be sure to check that you meet them before applying:
- Your business must be located in The United States or U.S. territories.
- The main proprietor (owner, trustor, general partner) needs a valid taxpayer identification number such as social security, individual taxpayer identification, or employer identification number.
Corporate Number Vs. Business Identification Number
There are two important numbers for a business; a corporate number and a business identification number. These numbers let the government easily identify and communicate with your business. But what are the differences between these two numbers?
A corporate number is also known as a business registration number. It’s a unique identifier assigned to your company by the government. Your corporate number is used to file your annual report and pay taxes.
On the other hand, a BIN is issued by banks and financial institutions. It’s used to identify your company when you open up a bank account or apply for credit.
Identifying The Business You Are Running
Identifying your business type is important for legal and tax purposes. But how do you make sure which type of business you run? You can know this information by looking at your business code:
There are four main types of business structures in the United States:
- Sole Proprietorships
- Limited Liability Companies (LLCs)
To find out which type of business you have, look up your business code – a six-digit business code found at the top of your business’s annual income tax form – in the North American Industry Classification System (NAICS). The NAICS is a system used by businesses and governments to classify businesses according to their primary activity.
Your business code will tell you what kind of business you have and what industry you’re in. This information is important because it will help you determine which licenses and permits you need and what tax obligations you have.
BIN For Different Businesses
Successful businesses tend to expand depending on their success, and the time they have been operating. If your business expands or you operate under different business names, it’s important to know that you’ll need a different BIN for each. The process for obtaining a BIN is the same as it was for your original application.
BINs For Nonprofit Organizations:
If you are starting or running a nonprofit organization, you may be wondering if you need a BIN. The answer is maybe. Some states require that all businesses, including nonprofits, have a BIN, while others don’t mention them concerning nonprofits. If you are in doubt, check with your state’s business registration office or the IRS to see if having a BIN is required for your nonprofit.
How Do I Know If I Need More Than One Business Identification Number?
You may need more than one Business Identification Number (BIN) if your business owns or operates in more than one state or if you are a vendor selling merchandise at multiple locations.
For example, a business with a store in Connecticut and another in Los Angeles would need two BINs – one for each location. If you are a vendor who sells merchandise at farmer’s markets in Connecticut, New Jersey, and Pennsylvania, you would need three BINs – one for each state in which you operate.
What Happens If You Don’t Have A BIN?
If you don’t get a BIN, your business will not be able to process payments. In addition, you may be subject to fines and penalties from credit card companies and banks. Worse yet, your business could be shut down entirely.
So it’s important to ensure you get a BIN as soon as possible after starting your business. Once you have a BIN, you’ll need to use it when processing payments. This includes when you’re making sales, accepting customer payments, and paying suppliers and vendors. Be sure to speak with strategic consulting services if you need more information.
What Uses Does A BIN Have?
Once you have your BIN, you can use it for various purposes. For example:
- To open a business bank account
- To process credit and debit card transaction
- To apply for a merchant account
- To register for certain government programs
- To file for taxes
As you can see, your BIN is an important part of doing business. Be sure to keep it in a safe place and do not share it with anyone who does not need to know it. With this information, you should be well on your way to obtaining a BIN of your own. Talk with professional accounting services to learn more.
Your Accounting Needs
At Nesso Accounting, we work hard to provide you with everything you need to run a successful business. That includes making sure you have the right identification for your business as well as how to protect it with cybersecurity and digital forensics.
Our Nesso Group team will provide all the necessary information and documents for you to obtain your Business Identification. We also provide digital advisory services for businesses of all sizes, we know how important it is to protect your business. Don’t hesitate to reach out now to learn more about our services and how we can help you.