When you’re starting a business, organization, or trust, you’ll need an EIN. It’s also called your employer identification number, and is issued by the IRS.
- Do I need an EIN and what are the benefits?
- Business structure
- How to get an EIN
- International applicants
- Frequently asked questions
Do I need an EIN and what are the benefits?
EIN stands for an employer identification number. It can be compared to a social security number, but for your business or organization. It’s a unique nine-digit number, which the Internal Revenue Service (IRS) uses to identify your business.
According to the IRS, your business needs an EIN if any of the following are true:
- Your business has employees.
- You operate as a corporation or partnership.
- You file employment, excise or alcohol, tobacco, and firearms tax returns.
- You withhold taxes on income paid to a non-resident alien.
- You have a Keogh plan.
- You’re involved with a trust, except for grantor-owned revocable trusts, IRAs, and Exempt Organization Business Income Tax Returns.
- You’re involved with an estate, real estate mortgage investment conduits, non-profit organizations, farmers’ cooperatives, or plan administrators.
From opening a business bank account to filing tax returns, having an EIN is necessary and helpful for keeping your business separate from your personal finances. It’ll also keep your social security number more private, which will prevent identity theft.
Your business structure also plays a role in whether or not you need one. If you’re in the beginning phase of starting your business, you’re likely to be a sole proprietor or single-member limited liability company (LLC).
As a sole proprietor or single-member LLC, you’re not required to get an EIN. However, having an EIN is a good practice because you may decide to hire employees as your business grows.
Without an EIN, you’ll open a business bank account under your social security number. If you decide to switch to get an EIN later, you’ll likely have to close the established accounts and open new ones under the new number. It’s not the end of the world, but it’s still a hassle.
You’ll need an EIN if your business structure is any of the following:
- Multi-member LLC
- C or S corporation
How to get an EIN
If you’re ready to get an EIN, make sure you go through the IRS because they’re the only ones that can issue one. Beware of other sites or companies because they might try to steal your personal information.
An EIN is free and can be obtained online, by fax, or mail. If you choose to mail or fax your application, you’ll need to fill out a Form SS-4, Application for Employer Identification Number. Once you’ve completed the form, mail or fax it to the IRS:
Fax: (855) 641-6935
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
If you choose to apply online, use the EIN Assistant by the IRS. It’s available Monday through Friday from 7 AM to 10 PM Eastern time. Take the following steps to apply for an employer identification number online:
Step 1: Go to the Apply for an Employer Identification Number (EIN) Online page on the IRS website and click Apply Online Now.
Once you click the Apply button, it’ll bring you to a page that shares information about the process. After reading the information, you’ll be ready to begin the application.
Step 2: Select your business structure. For the example, I selected LLC.
When you select your business structure, they’ll explain what it means to have that business structure to make sure you selected the correct one.
Step 3: Continue with your selection.
Step 4: Enter the number of members and the state where your business is located.
Step 5: Confirm your selection and information.
Step 6: Select the purpose for getting an EIN.
Step 7: Enter the responsible party’s information.
You’ll need to enter your personal information and contact information. Then you’ll receive your employer identification number, which you should keep in a safe place.
If you need assistance, you can visit the help section or call the IRS at 1-800-829-4933.
If you don’t have a social security number and aren’t a U.S. citizen, download the IRS Form SS-4 and fill it out while leaving section 7b blank.
You may call the IRS at 267-941-1099 Monday through Friday between 6 AM and 11 PM Eastern time, keep in mind this isn’t a toll-free number. It’s also helpful to complete the IRS Form SS-4 before calling.
To complete the process, you can finish it over the phone, fax, or mail. If you live outside of the U.S., use the following information to fax or mail your form:
Fax: (304) 707-9471
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Frequently asked questions
Is there a difference between EIN, TIN, and FEIN?
No, all three refer to the same thing. TIN stands for taxpayer identification number and FEIN stand for a federal employer identification number.
Is there a limit to how many I can get?
Each business will have one EIN. If you have multiple businesses, you can get another one. However, the IRS limits employer identification issuance to one responsible party per day. You’ll have to apply on different days if you need more than one.
What do I do if I lost my EIN?
The first steps to take are to look for the electronic notice, and if you can’t find that, check your tax returns or contact your bank if you’ve opened a business account under the EIN. If none of those work, you can call the IRS Business and Specialty Tax Line at 800-829-4933 Monday through Friday between 7 AM and 7 PM local time.
Can you cancel an EIN?
Although the EIN will always be tied to your business, you can close your business account with the IRS by following the Closing Your Account procedure.
Having an EIN will keep your finances organized, you’ll protect your social security number, have the ability to open business bank accounts, and file taxes with your business. You can get one easily through the IRS and it’s free. It’s good to have one when you’re starting because you can grow and hire employees without making changes to your taxpayer identification number when the time comes.
Featured image courtesy of Pexels.