Sole Proprietorship: A Sole Proprietorship is exactly what it sounds like … one person starting a business solely by him or herself. A sole proprietorship can have employees. A Sole Proprietor is allowed only one EIN and uses the same EIN for every Sole Proprietorship owned by that person. It wouldn’t matter if a person owned one business or a thousand businesses that are Sole Proprietorships. All of these businesses would use the same EIN. This is the simplest and least expensive form of business to set up. You will only have one EIN number for as many Sole Proprietorship businesses as you like. The problem with having multiple Sole Proprietor businesses is that a common EIN number will link them. If you create only one new business, this would be the simple way to go. I recommend you create multiple new businesses, which are independent of each other, and not linked by a common EIN. You can do this with the business entities that follow.
Partnership: Partnership is also just what it sounds like. Two or more individuals or entities form a business partnership (the entities need not be individuals and can be businesses). Two businesses can form a partnership or one individual and a business or six individuals, etc. Each partnership must have its own separate EIN unlike a Sole Proprietorship where all of your businesses use the same EIN. Partnerships are my personal favorite to set up a new business because each new business partnership gets a separate EIN and there are other advantages. A partnership has no linkage to any other business you might choose to create, unless you use the partnership to own another business. A partnership does not have the added expense or complexity of a Corporation, LLC, or Trust, which I cover in the next sections. Authors are a good example as they do this all the time. Many Authors use a Pen Name, which is NOT their Given Name, and they do business under their Pen Name. Actors, musicians, and artists are the same, as many of these types of people do not use their Given Name to conduct their professional business. It is common for such persons to work under a different name than their Given Name. Nobody disrespects a famous Author, Actor, or Musician as we admire and idolize these people. We extend famous and successful people special VIP status and privilege as Very Important Persons.
Corporations (INC) and Limited Liability Companies (LLC): Corporations and LLC’s must have their own EIN. If a person owned ten different Corporations or LLC’s, there would be ten different EIN’s, one for each business. These types of businesses limit your personal liability for the business. There is higher monetary expense and it takes more time to form these types of business entities. Corporations and LLC”s are subject to annual renewal fees a Sole Proprietor or Partnership are NOT subject to. There are continuing expenses and compulsory annual or quarterly filings to maintain a Corporation or LLC. The only advantage I see with these entities is the prestige of having an official title like “President” or “Chairman of the Board”. Anyone can form an LLC or Corporation and give himself or herself any official title they choose. I would advise against these forms of business due to the higher expense, higher complexity, continuing expense and compulsory filings … KISS … Keep It Super Simple.
Trusts: Trusts are the final choice for a new business and you get a different EIN for each trust. Trusts are more expensive to form and generally require the specialized assistance of an attorney, accountant, or both. I don’t recommend this more complicated form of business … KISS … Keep It Simple Stupid … or … Keep It Stupid Simple!
There are five paths to get an EIN you can use for setting up credit, opening bank accounts, buying or renting a home, connecting utilities, buying or renting cars, etc. Those five ways are to start a …
1. Sole Proprietorship
2. Partnership
3. Corporation,
4. Limited Liability Company (LLC)
5. Trust
All five of these business types can make you 100% anonymous. Your business(s) own the house, auto, pay for utilities, phone service, etc. You won’t function as a person anymore. You will be a business owner and have your business do everything for you.
When buying a car or house, you tell them to put it in your Business Name. They won’t even ask you what your personal information is except your name to sign as the owner of the business. If you do this right, you will not even sign your Given Name. THEY DON”T CARE because it is not a person buying the car or house! When turning on utilities, you tell them you are putting service in the name of the business. They will ask you for a contact name, phone number and email address of a person they can contact just in case they need to contact someone about the service. You can make up any name and phone number and they won’t ask for a SSN or anything else or sign your Business Name. I would give them a valid email address you have set up in advance so they can contact you if need be. I would personally also give them a valid phone number where they can leave a message you will get but NOT a phone or Cell Phone you would answer. Keep a record of the name, phone number and email address you give the utility company for contact purposes. You need to have the information for later in case you want to contact the utility to change or end service.
Another important thing about an EIN is this is the number your business will use to earn money. You are in fact your business so you are the one earning the money except the money is going into your Business Name and business account instead of a personal name and personal account. When you are paid, ask your client to make the check out to your Business Name instead of your personal name. This is how real businesses work and you want to be a 100% real and legitimate business.
You will also pay taxes under your Business Name, assuming you make enough money to pay taxes. You may not make enough money to pay taxes so check the tax table. You would still receive all the benefits of using a business identity, no matter how much money you made. In fact, a business can fail to make money and still be a legal business for eternity. Even if the business loses money every single year, it’s still a business and can stay in existence forever.
There are few things needed for a business to be established and legal. They are inexpensive or free. One thing a business may need is to file a Fictitious Name Statement. It may not be called a Fictitious Name Statement in your county or state but will have a similar name. Just call the local county courthouse in the county where you want to set up your new business and ask them what you need to do to start a new business. If it is done at the state level, you call the state. You can also find the information online for your county or state. To file a Fictitious Name Statement, there will be a small fee to pay.
I do it online and get a copy sent to my business email address.