What is an EIN?
If you start a business, one of the first things you will need to do is apply for an Employer Identification Number.
What is an Employer Identification Number (EIN)?
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique, nine-digit number used by the IRS to identify your business. It's like a Social Security Number, but for your business.
Your number will never expire or be issued to another business, even if you close your business. However, if your business has a change of ownership or structure, you may need to apply for a new EIN.
Who needs an EIN?
All types of business entities can apply for an EIN and most businesses are required to have one. If one of the following applies to you, you are required to have an EIN:
You have employees
You operate your business as a corporation or partnership
You file an Employment, Excise, or Alcohol, Tobacco, and Firearms tax return
You withhold taxes on income, other than wages, paid to a non-resident alien
You have a Keogh plan
Your business is involved in certain organizations including trusts, IRAs, estates, non-profit, and more which you can find on the IRS website here.
Even if you aren't required to get an EIN, there are perks to having one for your business, such as opening a business bank account, so you may want to still consider applying for one.
How do I get an EIN?
Before you apply for an EIN, you will need to properly form your business since the EIN application includes:
Your Taxpayer Identification Number (SSN or ITIN)
Your business name
Type of Entity
Business start date
Applying for an EIN is free and there are various ways you can apply.
The easiest way to get an EIN is online through the IRS portal. If your business is located in the U.S. or U.S. territory, you can use the IRS EIN Assistant to answer all necessary questions and get your EIN immediately once you fill out the application. The website session expires after 15 minutes of activity, so if you plan on filling out an application online, make sure you have all the necessary information you need.
By Fax and Mail
To apply by fax or mail, you will need to send in a Form SS-4, Application for Employer Identification Number. You can find the fax number and mailing address on the IRS website.
Generally, applications by fax are sent an EIN by fax within a week while the processing time for applications by mail is four to five weeks and your EIN will be mailed to you.
If you're an international applicant, you can call (267) 941-1099 (not a toll-free number) Monday through Friday from 6 AM to 11 PM EST. You will need to answer questions that are on Form SS-4.
Why do I need an EIN?
There are a variety of reasons you need an EIN for your business including:
Opening a business bank account
Applying for business licenses
Getting an EIN is an important step when starting your business. Once you file your formation documents and Master Business License Application, you should apply for an Employer Identification Number.
Disclaimer: This post is meant for informational purposes only and should not be taken as legal, business, or tax advice. Please consult with your accountant or bookkeeper for more information based on your specific situation. For more information, please read through the following resources: