What is an EIN number? why do I need it?

Question

I live in NC and have my own daycare. I just opened my daycare 7-8 weeks ago. One of the parents asked me about an EIN number. She wants to know if I have it? I have no idea what it is. I looked on google but all I found is that it's an ID number for businesses and info about how to apply. . I couldn't find WHAT IT IS USED FOR AND WHY?

Do i need it? Why?

thanks!

Answer 1

Daycare expenses are tax deductible.  Your clients will need to report who they paid expenses to.  Your EIN will be necessary for this.

See IRS form 2441.

Answer 2

It is an Employer Identification Number.  You do not need one unless you have employees.  Instead you give her your Social Security number.  She wants it because she is going to report the amount she pays you to the IRS.  Email me if you have any questions.

Answer 3

EIN is also know as the TIN, FIN.  It is the Employees Identification Number for tax purposes.  Also known as Taxpayers id number, or Federal id number. You need it for income tax purposes.  However, instead of applying for a EIN, it is perfectly OK, in your case, to use your social security number as your EIN.

Check the link below. It tells when you need an EIN.  ie as long as you do not have employees, etc. you can use your Soc Sec Number.

Hope this helps.