What Is An EIN? How To Get An EIN + FAQ. Know All About It.
The EIN is a crucial number for any business and should be obtained as soon as possible. Let’s start with what is an EIN guide. Ready? Let’s dive in! What Is An Employer Identification Number (EIN)? Why Do I Need One? How Do I Apply For One? Got More Questions? We Have Answers!
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An Employer Identification Number (EIN) is a unique nine-digit number that the Internal Revenue Service (IRS) assigns to businesses, sole proprietorships, nonprofit organizations, and certain government entities. For most people, having an EIN will mean you’re preparing to start your business or organization, but it can also be used for specific purposes.
When you’re an entrepreneur, it’s important to keep your taxes in check. If the LLC formation service provider is not properly registered with the proper tax authority then they might steal some of that hard-earned money from me! An EIN (Employer Identification Numbers) will be required in order for your new company’s taxes and profits reports, but it can either come from yourself or one of its owners!
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If you have workers, run a company or a partnership, file specific tax returns, or collect taxes on income other than wages, you’ll need an EIN. Before a company can start operating, it must first obtain an EIN. This can be done over the phone, online, by fax, or by mail.
EINs can be filed for and issued to a wide range of businesses, including:
- Single Member Limited liability companies (LLCs): You do not need to obtain an Employer ID Number if your business is a single-member LLC with no workers (or excise tax liabilities). If a single-member LLC has employees, it is necessary to have an EIN. It’s still a good idea (and often needed) to register a bank account in order to hire personnel later and keep your business cover maintained.
- Non-Profit Organisations (NPOs): If your corporation is a NPO , you must have an Employer Identification Number (EIN) for taxation purposes.
- Sole Proprietorship: When you are a sole proprietor without employees, it’s really easy to get by with not having an Employer Identification Number (EIN). But if your business structure has any workers and files taxes as an employer then this is necessary for identification purposes!
- Corporations: To start a business, you need an EIN. If your company has income taxes deducted from its profits or receives government credits for employee wages it pays out as salaries then they are also required to have their own identifying number – this makes sure that all revenue comes through properly so there’s no confusion about who owes what amount when payments must be made! Whether you are a small business owner with an S corporation or C-corp, getting and maintaining your EIN is important for tax reporting purposes.
- Partnerships: When you form a LLC, the company must obtain an EIN number. This is because it will file taxes as part of its partnership return and provide K-1s to members for distribution purposes only after legally registering with IRS under laws covering entity types like partnerships or multi member limited liability companies (LLCs).
- Trusts & Estates: EINs are an important part of the estate planning process, and can be used for various types trusts or estates under varying circumstances.
You may need an EIN if you do any of the following:
- Open a business bank account
- Apply for a federal tax identification number
- Pay taxes and file employment tax returns
- Conduct business as an unincorporated nonprofit association or club
Continue reading our What is an EIN guideline to understand if your company needs an EIN and how to obtain one for free from the IRS website by applying online, by phone, fax, or mail.
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What is an EIN Number?
An Employer Identification Number can be used to identify a business for tax purposes, which is required when opening up a bank account. An EIN is also necessary if you want to hire employees or get a federal tax identification number.
You can use an Employer Identification Number to file taxes and pay employment taxes, but only if it’s issued specifically to a sole proprietorship, partnership, or corporation. If you run a nonprofit association or club, you can use an Employer Identification Number instead of the Social Security number (SSN) for certain tax purposes.
Whether you run a small business or large an EIN can be beneficial for both.
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The word “employer identification number” (EIN) refers to a unique identifier provided to a business entity so that the Internal Revenue Service may quickly identify it (IRS). Employers frequently use EINs for tax reporting purposes. The number is nine digits long and is formatted as XX-XXXXXXX Companies can apply for EINs immediately with the IRS, and they are specific recognition right away.
EIN number example: The EIN number 12-3456789, for example, is a business’s Social Security number that is assigned to employers, sole proprietors, companies, partnerships, estates, trusts, some people, and other entities for the purpose of tax filing and reporting.
TABLE OF CONTENTS
Why Employer Identification Number Is Important?
Is an employer identification number important? Most small business owners find themselves asking this question. The EIN is assigned by the Internal Revenue Service and it’s used to identify a business entity. In many cases, you need an EIN even prior to starting your company. If you plan on hiring employees or if you’ll be filing any type of tax return, it’s a requirement.
EINs are also one of the first steps to setting up a limited liability corporation or limited partnership. Obtaining an Employer Identification Number, or EIN, from the IRS is one of the most important tasks for many new or restructuring firms.
An EIN has several uses, but one of its most important functions is to protect your Social Security Number from fraud. The government assigns the EIN as the official number for your business and it will appear on all tax forms and returns, fiscal documents, and government filings. This removes the need to provide your Social Security Number, which is a federal requirement for sole proprietorships.
However, EINs have many more uses and it’s important for any small business owner to understand each one before applying. An EIN is a nine-digit number that is used to recognize your company for tax purposes. It’s identical to a Social Security number, except it’s solely used for corporate purposes.
You’ll need an EIN as a business owner to open a bank account, register for licensing, and file your tax forms. Applying for one as soon as you start planning your business is a good idea. This will ensure that you do not face any delays in receiving the required licenses or funding.
Businesses should apply for an EIN as soon as possible after incorporating or starting a partnership, even if they have no employees or income. The EIN can be used to open a bank account, hire employees, and file for business licenses so it’s highly recommended that you obtain one immediately. Once you apply for an EIN, you have to verify EIN number electronically by the IRS, which means there are quick results.
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How To Get An Employer Identification Number (EIN) ?
It is free to apply for an EIN. Applications can be filed by phone, fax, mail, or online (for those who are not in the United States but will do business there). The technique is straightforward.
Form SS-4: Application for Employer Identification Number, which is available on the IRS website, must be submitted by applicants.
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In order to obtain an EIN, the IRS requires the following information to be provided on the application: the company’s primary officer, partner, grantor, proprietor, or any other title, as well as their individual taxpayer id number (SSN, ITIN, EIN).
The following are some of the details that must be included on the form:
- The nature of the entity
- The grounds for submitting an application (new business, change of organization, IRS withholding requirement compliance)
- The date on which the acquisition started
- The most critical business sector
- To apply for an EIN online, a business must be based in the United States or one of its territories. An EIN is issued immediately after the online information is confirmed
When Is An EIN Number Required By The IRS?
When you need to apply for an EIN for your business, the Internal Revenue Service (IRS) has specific, strict patterns.
If any of the following statements apply to you, you must obtain an EIN:
- Employees work at your company.
- Is your company a partnership or a corporation?
- Excise taxes are filed by your company.
- Nonwage income paid to a nonresident alien is taxed by your company.
Why Should a Business Obtain an EIN?
With an EIN, you can assign or transfer your business to another company in the event that it becomes inactive. The number never expires and is identical for every firm assigned with this identifier so there’s no need for reissuing when old numbers get reused after a merge/acquisition!
It is always a good idea to obtain an EIN number regardless of the type of business you operate. The following are some of the benefits of having an EIN:
- To open a business banking account, most companies need an EIN.
- A business bank account will make monitoring and monitoring your professional spending much easier.
- You can also improve your business credit and become eligible for more loans.
Before you can hire employees, you’ll need an EIN:
- Employees will file their taxes separately using the 1040 form provided by the LLC.
- Employers require an EIN to set up payroll for an LLC, and the IRS will monitor payroll taxes for taxpayers using the business’s EIN.
- To register for your state’s employer taxes, you’ll need an EIN number.
- If you’re a limited liability company (LLC), an EIN will assist you to keep your corporate entity maintained.
If you’re a limited liability company (LLC), an EIN will help you maintain your corporate entity maintained:
- The corporate curtain protects business owners from personal liability for the obligations of their company.
- Sustaining the corporate entity’s positive quality and competence by allowing your business to exist separately from its owners.
Identity fraud can be prevented with the help of an EIN:
- Your SSN (Social Security Number) will be maintained more confidential.
- When you keep your personal and business finances separate, it’s less likely somebody will hack into your accounts.
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How To Request An EIN?
We all know that forming a business is complicated, but the IRS has made it easy with their online EIN Assistant. You can visit this site as soon as your company’s been officially formed and follow along on the step-by process of getting an assigned number from them in just about five minutes!
Before you can receive an EIN, you should first form your corporation. The IRS will want to know when your company was founded and what its legal name is. Before applying for an EIN, you should first register your business and obtain state approval for the business name.
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The IRS has various rules and regulations that dictate who is allowed to use this service and how it can be used. These rules are designed to protect individuals from identity theft and fraudulent collection of tax debts.
IRS EIN Applicant Requirements
The IRS has various rules and regulations that dictate who is allowed to use this service and how it can be used. These rules are designed to protect individuals from identity theft and fraudulent collection of tax debts.
The following are requirements that an applicant must meet before they can apply for their own EIN:
- A Business Entity or Sole Proprietorship – You cannot complete the application process yourself, but this means that you have to form a new business entity. Visit the IRS website for more information about setting up a sole proprietorship or a corporation.
- A Not-for-Profit Entity – You cannot complete this application process as an individual person, but if you were to form a not-for-profit entity such as a trust, LLC, or partnership the EIN would be assigned to that business entity and not to you as an individual.
- An Individual (living in the United States) – You cannot apply for an EIN as a dead person, as a corporation, or as someone who is not legally living within the United States.
- The Business Entity’s Exact Legal Name Must be Used – If you are creating a new business entity then use that exact name on the application for the EIN.
- You Cannot Obtain an EIN for a Pending or Inactive Business Entity – If you registered the business entity with your State and they have not yet approved that registration, then you cannot apply for an EIN until they either approve or deny that registration. You will need to contact your state directly if this is the case.
- An Individual (living outside of the United States) – If you are a US citizen who no longer lives in this country, then you cannot apply for an EIN because you need to be living within the United States at that time.
- You Cannot Obtain an EIN as a Beneficiary of a Trust – The EIN must be created for an entity, not as a beneficiary of a trust.
In order to complete the application process you will need:
- Your SSN or ITIN – You cannot apply for your own EIN if you do not have a tax identification number. If it has been more than 5 weeks since you were assigned the number, then you will need to contact the IRS directly.
- Your Business Entity Legal Name – You cannot obtain this EIN if your business entity name is different than its legal name, so make sure it matches exactly before applying for the EIN.
- Your Company Address – If you are forming a new company then you will need to use your company’s home or mailing address on the application. You cannot give a Post Office Box as your address.
- A Federal Tax Identification Number for Your Business Entity – Your EIN application can only be completed by an officer of the business entity, so if they do not have one then you cannot apply for this EIN.
- Your Valid Email Address – The IRS will send you an email to confirm that they have approved your EIN so you need to have a valid email address to receive it.
- Information About Your Company’s Products or Services – You cannot obtain this EID unless you are actually doing business under the entity name, so you need to tell the IRS what you will be selling or offering as a service.
- The EIN application must be mailed to the main IRS location in Andover, Massachusetts and it may take up to 60 days for them to approve your request. After that time period passes they will send you an email confirming that they have approved your request and then you can visit this page to view the details of your EIN.
How To Get A Free Employer Identification Number?
The EIN Assistant, which may be found on the IRS website, is the quickest and easiest way for individuals to obtain an EIN lookup free.
Here’s some advice on how to get your EIN number from the IRS EIN Assistant:
- The IRS’s hours of operation for acquiring an EIN are 7 a.m. to 10 p.m. Monday through Friday.
- Hardly businesses based in the United States and its territories are eligible.
- A valid Taxpayer Identification Number is required (SSN, ITIN, EIN)
- Only one application per day is allowed by the entity owner or responsible party.
- Your application cannot be saved and must be completed in one sitting.
- If the session is not in use, it will time out after 15 minutes. Once the form is completed, you will receive an EIN right away.
- If an EIN was previously obtained online, the application cannot be processed.
- Form SS-4 can be used to apply for an Employer Identification Number (EIN) by fax or mail.
Steps For Online EIN Application Process
- In the first step, you have to you need to select what type of business you need to start such as (LLC, Sole Proprietorship, Corporation, etc.
- In the second step, you need to mention how many members are there in your LLC, and you need to select the state where your business is located.
- In this step, you need to choose a reason for why you are applying for an EIN.
- Lastly, in this step you need to tell about the responsible party of the LLC and choose between options whether you are an owner or a third party applying for an EIN.
Learn more about IRS Employer Identification Number.
Conclusion
The EIN is a crucial number for any business that operates in America and needs to retain employees. Non-employers must also file one, whether they are corporations or partnerships. f you’ve been operating a business in America without an EIN now’s the time to get one. The IRS is cracking down on those who haven’t filed for this number and penalties are steep if your business falls under their radar.
To make sure that doesn’t happen, we’ve put together a quick guide with all of the information about what an EIN is and how it can benefit any employer or non-employer alike. The EIN is used for tax purposes as well as any other legal matter that requires the business’s information. If you have questions about your own filing process, don’t forget to leave them in the comment section below!
FAQs On Employer Identification Number
1. How do I look up my EIN number?
It’s simple to search for your EIN number, and there are various options available. The IRS will generally give you an email or a physical document verifying your EIN application. You can also look for your EIN printed on business documents like tax returns.
2. Is there a difference between an EIN and a TIN?
No, an Employer Identification Number (EIN) and a Taxpayer Identification Number (TIN) are the same things (TIN). Both terms apply to the IRS’s nine-digit number for your business.
3. Do I need an EIN if I’m self-employed?
If you’re self-employed, you can just use your Social Security number instead of an EIN. However, some self-employed people would prefer to file for an Employer Identification Number (EIN) instead of using their Social Security number to minimize the possibility of identity fraud; keeping company and personal funds separate makes it a little less probable for someone to break into your accounts.
4. How do I look up another business’s EIN?
You can discover another company’s EIN by searching the Securities and Exchange Commission’s (SEC) EDGAR online Forms and Filings database for the business.
5. How do I recover my EIN if I forget or lose it?
If you still can’t seem to find your EIN after checking for a confirmation email or letter or identifying it on your business paperwork, call the IRS EIN Department at 1-800-829-4933 to speak with a professional. Monday through Friday, from 7 a.m. to 7 p.m., they are open.
6. Do I need an EIN for my LLC?
The need for an EIN number is necessary when LLCs want to hire employees.
7. Does a DBA need an EIN?
Well actually, a DBA does need an EIN. After all, that’s what makes up their business identity!
8. Do I need an EIN before or after I form my LLC?
The formation of your LLC is an important step in establishing the company. You will need to get permission from the state before you can use its name, and the date on which it was formed as well – this information should be included when applying for EIN (Employer Identification Number).
9. Is an EIN the same as an SSN?
Without an employer identification number, it would be difficult for the IRS to identify your business in tax documents. An EIN is like a Social Security Number (SSN) and separates an individual’s identity from their company one; however, this nine-digit number can also help your startup/established companies so that they don’t get lost amongst other larger organizations!
10. What is an EIN and why do I need one?
An EIN is a nine-digit number that is used to identify your company for taxation purposes. It’s identical to a Social Security number, except it’s solely used for corporate purposes. You’ll need an EIN as a business owner to open a bank account, apply for business permits, and file your tax records.
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