Podcast

Episode 360

Jun 18, 2021

Michael and Allissa discuss Employer Identification Numbers - an EIN. They cover all of the details from what exactly one is, who needs one, and how to get one.

Listen to "E360: Do I Need an EIN?" on Spreaker.
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EPISODE 360

Weekly Roundup

Discussion Topic

  • Michael and Allissa discuss Employer Identification Numbers - an EIN. They cover all of the details from what exactly one is, who needs one, and how to get one. 

Quick Tips

  • If you receive a call claiming to be someone verifying your PPP forgiveness information. BE VERY CAREFUL. There are scammers out there using this as an opportunity to acquire your personal information. If you do not know the caller, hang up and call the banker that you received the PPP loan from originally.
  • Delete your FB memories. Stop living in the past.

Sponsors


Transcript: 

Sponsor message:

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Allissa Haines:

Hello, everyone. Welcome to the Massage Business Blueprint podcast, where we help you attract more clients, make more money, and improve your quality of life. We are not messing around here. I am Allissa Haines-

Michael Reynolds:

And I'm Michael Reynolds.

Allissa Haines:

And we are your hosts and we are delighted. You are joining us. And clearly, we are pepped up, me with coffee and Michael just the Verve of life and-

Michael Reynolds:

Oh, chucks.

Allissa Haines:

... Michael doesn't drink coffee, although, oh, we're recording on today, which is June 16th, which first of all, happy birthday to my niece, Ella. And second of all, I think it's Captain Picard Day.

Michael Reynolds:

What!?

Allissa Haines:

My Facebook-

Michael Reynolds:

How did I miss this?

Allissa Haines:

I know my Facebook memories this morning, I have a whole other story about my Facebook memories, but my Facebook memories this morning said something about Captain Picard Day.

Michael Reynolds:

I'm furiously Googling.

Allissa Haines:

I know, right?

Michael Reynolds:

June 16th.

Allissa Haines:

Yeah. So-

Michael Reynolds:

I cannot believe I missed this.

Allissa Haines:

... if you're listening... You didn't, you're welcome. So you'll be listening to this on June 18th or later, and you've missed it, but you know mark it in your calendar for next time. And I'll try to remind you ahead of time next year, everybody.

Michael Reynolds:

Right on, thanks for the tip.

Allissa Haines:

Hey, tell us about a review that we've gotten.

Michael Reynolds:

I would love to. So, as you know, we are selectively reading reviews on the air each episode, that one is available to us and we have one available to us today. And the perk we're offering is if we read your review on the air, then you can email us and claim a 30-minute-complimentary consulting session with Allissa and me, and we will chat about whatever you want, help you with any questions you might have or think through any challenges you're having in your business. And today we have a review from CI wellness, which was left for us this month. And CI wellness says, "Great resource and awesome podcast for any massage professional. It provides relevant, up-to-date information for what's going on and important to the massage industry. As a massage teacher, I have made this podcast a day-one resource for new students. Thanks, Allissa and Michael." That is amazing.

Allissa Haines:

That's really thoughtful.

Michael Reynolds:

I love that we are included in CI Wellness's massage curriculum. That is fantastic. It warms my heart.

Allissa Haines:

Oh, I cannot wait. So email us CI Wellness at podcast@massagebusinessblueprint.com and I will get back to you with some times we can do some consulting and also, yeah, I'm really excited. I love working with students. I love it.

Michael Reynolds:

Yeah.

Allissa Haines:

And we actually had a premium member join yesterday or the day before. And it is a person who is just starting massage school and in his research for stuff, he stumbled on our podcast and then was like, whoa, there's a premium membership and joined up and it's so exciting. Well, but I didn't get permission to use his name or anything. So welcome new member who's in school because I know you're listening to this podcast and it's just really exciting. I love the idea that we can work with someone through their education and so that when they graduate, should they want to work for themselves. They will have a good understanding of what that's going to mean right when they graduate and be ready and prepared to just succeed like crazy. So that's exciting. Michael, what are you reading?

Michael Reynolds:

I'm listening to a podcast from the New York Times called The Daily, which is one of my regular rotations. And this one is titled The Unlikely Pioneer Behind mRNA Vaccines. I really liked this. It was fascinating and this is obviously very relevant for today because of the mRNA vaccines that are COVID vaccines. And so I was listening to it and it's the story of Dr. Katalin Kariko. I think I'm pronouncing the name correctly, who was the woman that basically pioneered the mRNA technology that we have in the Pfizer and, I believe, Moderna vaccines and I think some others as well.

Michael Reynolds:

So it told the story of how she had this idea of messenger mRNA and how it could be used in vaccines and treatment of different conditions. And so the story of her struggle to bring her idea to fruition and the challenges you faced along the way, and then ultimately how it seems serendipitous that suddenly here is a use case for it right in front of her, with the COVID vaccine and how it came together to allow us to create, I say us as if I had any part in it, allow brilliant scientist to create the COVID vaccines based on mRNA technology.

Michael Reynolds:

And so there's two reasons I like it. One, is this story of this woman who was brilliant and made this happen. And two, just to, sorry for those who claim we're getting political, but I'm getting a little political here, I guess if it's thought to be political, but some people seem to be very hesitant about the vaccine or against it because they're like, "Oh, well it was rushed" and all this stuff and "I don't trust it." And it really is a nice story of how it wasn't rushed. The technology was developed very methodically and it happened to be timed in such a way that it was useful in the vaccine, but it really helped me understand how the technology works and how it came to fruition in the vaccine, which was very reassuring and very enlightening. So I thought that was a very interesting and useful and valuable story that was told. So that's what I've been listening to.

Allissa Haines:

I can only agree. And I was actually really excited to read, it's not new news at this point, it's like a month old, but Moderna has actually been working on an mRNA vaccine for several different things, but one of those things is HIV and it's had really good results. I think we just hit the 40-year anniversary of the first person who was diagnosed with HIV/Aids and yeah, the concept that we could have an effective vaccine for that is just mind-blowing.

Allissa Haines:

And I think really important, I don't know. I mean, it's important for everybody, but it felt especially important for me being our age, where this was all happening. In my very early childhood, the awareness of this HIV and Aids. And especially with the passing of Irene Smith recently, who began and did much of her first hands-on work in San Francisco during the beginning of, and during that epidemic and caring for men who were dying of this, and combined, all of this stuff is really fascinating and really heartening and really important for us to remember what happens when it takes so long. They have been working on this technology and these things for a very, very long time.

Michael Reynolds:

Yeah.

Allissa Haines:

So anyhow-

Michael Reynolds:

Fascinating.

Allissa Haines:

... what I'm reading is, and I just finished last night, it took me a while to get through it, just because of timing, but I love Jenny Lawson, who started writing as the bloggess, she has been blogging since a million years before anybody else. And she is a woman who struggles with some chronic illness and some mental illness. And she writes in the most beautiful and hilarious ways. Her stories are phenomenal and this is her third or fourth book, called Broken. It's called Broken (in the Best Possible Way), and, as all of her books are, she's got one that's called Furiously Happy, and I can never remember the title of the other one, but she is so funny that when you're reading it, I woke Walt up laughing because he went to sleep early next to me.

Allissa Haines:

And I'm reading by the light of my little candle. And I was not laughing out loud, but I was laughing so hard. I was shaking the bed and he was like, "What is going?"

Michael Reynolds:

That's funny.

Allissa Haines:

So it is so good and so thoughtful and so sweet and important. I firmly believe that her books are really important for people to read if they struggle with mental illness or they love someone who's dealing with mental illness and which is all of us and so good. Anyhow Broken, Jenny Lawson, link in the podcast notes.

Michael Reynolds:

Nice. Thanks for sharing.

Allissa Haines:

Who's that first podcast sponsor?

Michael Reynolds:

All right. Our friends at Jojoba.

Allissa Haines:

Yay and it's so exciting because Jojoba is launching a new thing. They are launching the HobaCare Retail Starter Kit, and they're doing this because so many massage therapists have told Jojoba and me that their clients are like, "Hey, what did you use on my skin? It feels amazing." I personally have had clients be like, "What are you using? I don't feel greasy," or "I love when you use this because my skin doesn't feel all gross and suffocated." "This is way better than the Jergens I use at home." So anyhow I went off script there, people. So they have launched the HobaCare Retail Starter Kit. So you can get some extra help and some extra love starting to sell retail at your office. They're giving a really wonderful deal on, you can get the regular or the organic HobaCare, and they give you a little one-ounce sampler.

Allissa Haines:

They give you 6.4 something ounces and 6.8 something ounces and a whole bunch of brochures and a sell sheet and a line sheet and everything you need to get started selling this at your office, making a little extra coin, and also being of service to your clients who want this stuff to take home. So if you, like me, have found yourself pouring from your gallon jug of Jojoba into smaller bottles to hand it to a client and probably not charging them anything or enough because they've mentioned somehow they like it. Now you can get official with it with the HobaCare Retail Starter Kit. I'm trying so hard to like, read off of the copy and get this right because-

Michael Reynolds:

Because you're so excited.

Allissa Haines:

I am indeed so exciting. So you can go to massagebusinessblueprint.com/jojobakit and that is J-O-J-O-B-A K-I-T, massagebusinessblueprint.com/jojobakit, and learn all about it. And that's what I have to say about Jojoba today.

Michael Reynolds:

Cool stuff. Thanks for that.

Allissa Haines:

It is cool stuff. So we were handing the topic to Michael today and Michael is going to tell us what's an EIN and who needs one anyway?

Michael Reynolds:

Oh boy, this is going to be an action-packed episode. I'm sure you're on the edge of your seat. All right. So what's an EIN? So yeah, we're going to talk about EINs, what they're for, who needs it, why you might want to consider it and stuff like that. So what does an EIN? EIN stands for Employer Identification Number sometimes it's called a federal EIN. So F-EIN or federal tax ID. It is a tax identification number for your business, much like your social security number is used as an identifier for taxes as a person. The EIN is thought of as that same equivalent for your business. So again, that stands for employer identification number, and it's used in a lot of ways and including taxes for your business and stuff going with that. So who needs an EIN, who would benefit from this, who needs it?

Michael Reynolds:

So first of all, there are some requirements. Some businesses are required to have an EIN. First of all, any business entity with employees, even if you're a sole proprietor, if you have employees at all, you need to have an EIN. The IRS requires you to have one. So that is a requirement for a business with employees, also corporations or any entity taxed as a corporation. This probably doesn't apply to most of our listeners, because I would venture to say most of our community is made up of sole proprietors and LLCs. But we do have some people that are S-corps. I don't think we have any C-corps, but we have some S-corps out there. You are required to have an EIN. A multi-member LLCs, so if you're an LLC, which is, again, is a Limited Liability Company, if you are a multi-member, meaning you have more than one owner.

Michael Reynolds:

So, for example, Allissa and I have an LLC that is two partners each of us. So we are a multi-member LLC. So if you're in a massage practice with partners and there's more than one owner, and you're an LLC structure, you are required to have an EIN. If you buy a business or inherit a business, it doesn't happen too often, but we've had some of our community members that have sold or bought a massage practice and that would apply. To make that transition, you have to have an EIN. If you have a business retirement plan specifically, it's like a Keogh plan or a solo 401k, I'm even going to mention the Keogh plan because it never happens. But solo 401k happens a lot. So we've talked a bit about the solo 401k plan in the past on the show and to have a solo 401k plan, you do need to have an EIN.

Michael Reynolds:

So if you're a sole proprietor or an LLC and you're working out for social. Then you could say, "Hey, I want to set up a solo 401k to save more in retirement." At that point, you need to get your EIN or a kind of a negative one if you file for bankruptcy, hopefully, it doesn't really pop up for us, but that is a requirement as well for having an EIN. All right so that is, who needs an EIN, but let's say you don't necessarily need one and you're thinking about, should I get one anyway, there are quite a few advantages to having an EIN and I'm going to run through them here. And I'm sure Allissa has some to join me on as well, but I'm going to start by saying preventing identity theft is one of the primary advantages of an EIN.

Michael Reynolds:

It gives you the option of keeping your social security number out there in fewer places. So you're not having to give out your social security number as often you can instead use your EIN for business transactions. So that is a way to shield your social security number. It also credibility and professionalism. So if you are working with a vendor or partners or signing contracts, a lot of times they will ask for your tax ID and if you put your EIN there, it just lends an air of professionalism. It just sends a message that, Hey, we're structured as a business here, we're using a business tax ID, just add some credibility, and, again, going back to the first point protects your social security number.

Allissa Haines:

So I would use this on a W-9 if a college hired me to do a chair massage gig and they needed me to fill out a W-9 to pay me as a contractor. I could put my EIN there instead of my social. So that some intern working in the billing department doesn't steal my identity.

Michael Reynolds:

Yeah. It's a great use case.

Allissa Haines:

Cool, thanks.

Michael Reynolds:

Yeah. Also, it helps you logistically and mentally separate your personal and business finances. So we hop on this a lot, I think. And rightly so, because we're big fans of making sure that people really have a clear separation between their business and personal finances, from separating your bank accounts to your books, just how you think about it and how you spend money and take money in. Having a separate EIN just adds to that mindset of separating your business and personal finances. You think of your personal finances under your social security number and your business finances tied to your EIN it helps that mental separation. Also helps you open a business bank account. Sometimes you can open a business bank account without an EIN, but it's more common, I think, at least anecdotally I've seen that most banks will require an EIN to open a business bank account.

Michael Reynolds:

And that goes back to the previous point, which is you really want to have that separation. You want to have a separate business bank account where your massage income comes in, your expenditures for your massage practice go out. And the only crossover happens when you pay yourself. If you're paying yourself from your business account to your personal account, that is the flow of money between accounts. Otherwise, there is a strict separation. All business income comes into your business account, all business expenses come out of your business account. And so opening that business bank account will typically require an EIN. So that's going to help you do that. Also, licenses this is more of a general thing and Allissa, I'm going to have you fill me in on what knowledge I might be missing here, but generally, a lot of licenses for professionals will require an EIN.

Michael Reynolds:

So in your massage practice, did your-

Allissa Haines:

No.

Michael Reynolds:

... licensing body require an EIN?

Allissa Haines:

Nope.

Michael Reynolds:

Okay. Yeah. So maybe it's not as much of a factor for a massage therapist, but there may be cases where your area in particular for your licensing requirements may require an EIN it may happen, so it's nice to get ahead of that. Also, it helps you easily hire employees. So if you ever grow to the point where you think, "Hey, I might want to hire an employee or two," maybe you want to expand your massage practice, having an EIN will let you go ahead and do that without jumping through the hoops to get it last minute if you're trying to hire somebody. So having that in advance will allow you to have that option in front of you. Also, Allissa and I are not big fans of credit and loans and debt, but that being said, getting a credit and loans and debt is easier with an EIN for your business. So if that's something that is going to be a factor for you, that's something to think about.

Michael Reynolds:

Also, planning for retirement, going back to the original list of who needs it. If you want to set up a solo 401k plan or a standard 401k plan for your business, you will have to have an EIN. So just a quick little recap on this. A lot of times, the first step for a massage therapist to save for retirement is an IRA or Roth IRA, but there are limitations when you bump up against those limitations. Then, the next step beyond that, if you want to save more than what's allowed in that account, you might want to look at a solo 401k plan. And when that happens, you're going to need that EIN. So that helps you to expand your options for retirement planning or retirement savings. And finally protection of assets from business losses. So again, this helps reinforce the fact that you are running a separate entity.

Michael Reynolds:

So if you have some sort of negative event in your massage practice, you have some lawsuit or some sort of loss or liability or risk that can result in business losses or an issue that is similar. You might run the risk of having your personal assets exposed if you don't have strict separation. So an LLC is one way to create that legal separation and the EIN reinforces that. So anything you can do to send the message and set the precedent that your business is a separate entity is going to be very helpful. If you have any sort of negative event that causes some sort of loss or liability in your business, that goes a long way toward restricting it and protecting your personal assets.

Michael Reynolds:

So to me, these are really important factors. And generally when people say, "Hey, should I get an EIN?" There's never a one-size-fits-all in all cases, but I have never come across an occasion to say, "No, you shouldn't." Generally, an EIN makes a lot of sense. The pros are pretty clear and I haven't run across really any cons or any downsides. So that's my thought process there. So before we move on to how to get one, what have I missed Allissa? Any thoughts you have?

Allissa Haines:

No, I don't think you missed anything. That was a comprehensive dude.

Michael Reynolds:

Cool. Well, let's wrap up with this. How do you get one? Let's say you're out there thinking, okay, cool. I'm convinced to listen to Michael. I would like an EIN, send me an EIN. How do I get one? Cool. Don't pay for it. It is free. It is free, it takes about 10 minutes to get instantly. So you get one by going to the IRS website and the best way I found just to tell people it was just to Google "Get EIN IRS". I Google that and that leads me to the IRS website. You will probably see other services, the pop-ups that say, "Hey, give an EIN in for $49" or whatever, and don't click on those because while they will get you an EIN, they will charge you money for it, which is fine. Some people are, they want to pay for that, but you really don't need to it's super easy.

Michael Reynolds:

So go to the IRS website, we'll have a link in the show notes here as well. So go to episode 360. If you want the direct link we're going to send you. And you go online and you plug in your business information, whether it's a sole proprietorship or LLC, you plug your information in there and you fill out the form online, answer some questions. And at the end, you will have your EIN issued to you instantly. And you will download a packet. That's a PDF file and it'll have your EIN in there. It'll be your official documentation and you'll save that wherever you store your official documentation for your business and poof, you have an EIN. And after that, you want to talk to your accountant and tax preparer and tell them you have done this and let them know that you have the EIN and they will advise you on the steps to follow for using it and implementing it. So that is how you get one.

Allissa Haines:

Don't pay for it.

Michael Reynolds:

Don't pay for it, yes.

Allissa Haines:

Do not pay for it. They're like all these websites that will try to make you pay like $300 for it or something. Do not pay for it. It is a free thing, irs.gov.

Michael Reynolds:

Absolutely. So, yeah.

Allissa Haines:

Thank you.

Michael Reynolds:

That's the rundown on EINs.

Allissa Haines:

Everybody, if you don't have one, go get one.

Michael Reynolds:

Right on.

Allissa Haines:

All right. Who's our next sponsor, Michael?

Michael Reynolds:

Well, Hey, our friends over at Acuity.

Allissa Haines:

Indeed, it is. You can, I lost my place on the page. [crosstalk 00:22:21] used to that, I'm sorry.

Michael Reynolds:

You're welcome.

Allissa Haines:

My screen is doing like a little weird flashing thing. Acuity is your online assistant working 24/7 to fill your schedule. You don't need to play phone tag. Phone tag stinks. Clients can very quickly look at your real-time availability, book their own appointment, pay online, answer your little, have you been vaccinated, or exposed to anybody who has COVID questions. You can eliminate no-shows with the email reminders and text reminders if you choose, and you can check all this out with a special 45-day-free offer when you sign up today at massagebusinessblueprint.com/acuity.

Michael Reynolds:

Thanks, Acuity.

Allissa Haines:

Thanks, Acuity. Michael, what's your quick tip?

Michael Reynolds:

I have a quick tip. This quick tip, actually, it comes from Kim and Julie, our accountants, they work with us and a whole bunch of our members that we love to refer. So this is from Kim and Julie, at the tax advantage. Kim posted this actually on her Facebook profile and said, this is related to PPP loans specifically, she said, "If you receive a call claiming to be someone verifying your PPP forgiveness information and be very careful, there are scammers out there using this as an opportunity to acquire your personal information. If you do not know the caller, hang up and call the banker that you received the PPP loan from originally." So that's a great tip. Unfortunately, people are always trying to scam us and get our personal information and identity and money. And just a reminder to always go back to the source you got the loan from and watch out for that. We have some members that actually said they got these calls and they've experienced this. So it's happening.

Allissa Haines:

It sure is. That's a good tip. Thank you. At the top of the episode, I mentioned about a Facebook memories thing. A thing I did just a hint under a year ago was like, I don't know. Facebook was sucking me in with these stupid memories. And then I would look at these memories and be like, this is not a thing I really... This is stupid. It's something stupid that I said in like 2011, or I was like, "Argh, I don't need to be reminded of my past." But it was having trouble blocking getting memories of them and whatever. So I started every day, I look at the Facebook memories and I delete them. I just delete them. I'm slowly deleting my entire Facebook stuff. I keep a few if it is something that I actually want to be reminded of because it is relevant and good and brings about happy warm feelings.

Allissa Haines:

And otherwise, I delete them. So every morning-ish or whenever I check Facebook, any particular day, I delete the bulk of my old Facebook memories. And why? Because I want to stop living in the past. I don't need to remember crap that like, if it was important, I'm going to remember it anyway. And so it's out of a few pictures or stuff that I think is really cool. And I want to remember I am deleting all of the random crap from the past on my Facebook's. There you go.

Michael Reynolds:

Okay.

Allissa Haines:

That's what I'm doing.

Michael Reynolds:

There you go.

Allissa Haines:

So thank you everyone for listening to this podcast episode today, we really appreciate you. If you have a question or a topic you want us to answer or cover, you can email us at podcast@massagebusinessblueprint.com. You can visit our website for all of our resources, and informative blog posts, and all of our archive podcast episodes again, website massagebusinessblueprint.com.

Allissa Haines:

And also you can give us a review. Please leave us a review on Apple Podcasts. As you heard at the top of the episode, we are reading review every week and awarding a free 30-minute consult with me and Michael, Michael and I, Michael, and me, I don't know-

Michael Reynolds:

Michael and me.

Allissa Haines:

... but you can correct my grammar when we have the consult. So leave us a review on Apple Podcasts and maybe we'll choose you read yours. You'll get some time with us. We really appreciate you taking your time and giving it to us and listening to this podcast. So I hope that you have a lovely, productive, successful day.

Michael Reynolds:

Thanks, everyone.

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