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Q: More than one business in corporation tax ID ( Answered 5 out of 5 stars,   6 Comments )
Subject: More than one business in corporation tax ID
Category: Business and Money > Accounting
Asked by: jody-ga
List Price: $10.00
Posted: 08 Jun 2002 08:17 PDT
Expires: 15 Jun 2002 08:17 PDT
Question ID: 23814
I just started a business online.I'm incorporated.I want to open two
more business's.My corporation will own them. Can I operate them under
the same Federal and state tax ID #'s ,or do I have to get separate
ID#'s for each business? They will not be online,but here in my city.
Subject: Re: More than one business in corporation tax ID
Answered By: xemion-ga on 08 Jun 2002 10:30 PDT
Rated:5 out of 5 stars
Here are the guidelines for a corporation on whether or not to get a
new Employer ID Number (EIN):

"You need a new EIN if:
- You are a subsidiary of a corporation and currently use the parent’s
corporate EIN.
- You become a subsidiary of a corporation.
- The corporation becomes a partnership or a sole proprietorship.
- You create a new corporation after a statutory merger.

You don’t need a new EIN if:
- You are a division of a corporation.
- After a corporate merger, the surviving corporation uses its
existing EIN.
- A corporation declares bankruptcy.
- Your business name changes.
- You change your location or add locations (stores, plants,
enterprises or branches).
- You choose to be taxed as an S Corporation.
- After a corporate reorganization, you only change identity, form, or
place of organization. For example, a business may incorporate in
another state as a new corporate entity."

These were taken IRS publication, Understanding Your EIN:

From what it looks like to me, if you are opening these business under
your current corporation, you would not need another EIN.  If these
business are going to be a "subsidiary" of your current corporation,
you will need a new EIN.

Please note that this is not intended to be legal advice.  I suggest
consulting a business lawyer for a more detailed answer regarding your

Thanks for the question and if you require more information, don't
hesitate to ask for clarification.  And if you find this answer
satisfactory, please feel free to rate it. Thank you!
jody-ga rated this answer:5 out of 5 stars

Subject: Re: More than one business in corporation tax ID
From: dray-ga on 08 Jun 2002 11:22 PDT
Every corporation is required to have one, and only one, Federal Tax
ID.  If your intention is, as you state, to have the one corporation
own all three of the businesses, they will all need to report under
the same federal (and state, for that matter) tax IDs.

On the other hand, if the three businesses were to be held in separate
corporations, then each would have its own set of federal & state tax
IDs.  There may be both positive and negative consequences to this
style of ownership, but it is unusual for a startup situation (most
notably, the principal positive is that each corporation is protected
from liability exposure of the other, while the principal negative is
a substantial increase in paperwork burden).

The only thing worse than not having a federal tax ID assigned when
needed is to inadvertently get more than one assigned where only one
is called for.
Subject: Re: More than one business in corporation tax ID
From: dray-ga on 08 Jun 2002 11:24 PDT
One clarification -- when I said they all need to "report under ths
same " ... ID, what this means is they file a single tax return with
all numbers combined within it.  You will NOT file multiple tax
returns under a single tax ID.
Subject: Re: More than one business in corporation tax ID
From: larre-ga on 08 Jun 2002 15:57 PDT
Hi Jody,

As a business owner myself, I'd recommend talking to a CPA or business
tax specialist to learn the best way to structure your business for
tax purposes. This could save you thousands of dollars yearly overall,
even it you have to spend a few bucks up front. Benefits of operating
separate businesses as corporate divisions or as subsidiaries depends
upon the type of corporation, the type of business, and the special
tax implications and/or deductables in your industry.

Subject: More than one business in corporation tax ID
From: weisstho-ga on 08 Jun 2002 18:44 PDT
All sound advice - but please note Larre's comment - a couple of bucks
spent with a good expert CPA can (and no doubt will) save you many
$$$.  Tax attorneys are also excellent sources.

I would suggest that you respectfully consider the following:  Make
sure that the actions that you are taking relative to the various
entities are consistent with the reasons you formed those entities.
Many people choose corporations or limited liability companies to
shield themselves from liability. But if the entity is not maintained
very carefully so as to protect the independent status that it must
maintain, you might find that in the unfortunate event that you are
sued, that you may not have the protection that you paid for. The
plaintiff pierces the corporate/entity veil and there you are, exposed
to the very liability that you were hoping you were protected from -
the cost of not being extremely careful in keeping things separate.

But, good luck!  Biz must be good!!

Subject: Re: More than one business in corporation tax ID
From: dray-ga on 09 Jun 2002 06:32 PDT
I agree with these other respondents -- professional advice from a CPA
is essential in this area.  Perhaps from an attorney, but the CPA is
critical.  You need to consider tax implications in choosing whether
you'll use an S corporation or a C corporation; if you are
contributing startup capital you'll need advice on capital structure
(debt, equity, or a combination); if you're using an S the structure
of loans can have major impact on deductibility of losses; and the CPA
can explain the importance of maintaining good records and, as
mentioned by someone else, of NOT "piercing the corporate veil", which
can lead to major tax problems and ultimately, eliminate the liability
protection corporations are so important for in the first place.
Subject: Re: More than one business in corporation tax ID
From: jody-ga on 09 Jun 2002 21:01 PDT
I just want to thank everyone for their help. I could not get an
answer to my question anywhere,until I tried GOOGLE!!This is a great
service.And by the way I am going to speak with a CPA. Thanks

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