How to Get an EIN Number
Employer Identification numbers (EINs), sometimes referred to as taxpayer-identification numbers, are easy to obtain and valuable to have. It's best to think of them like Social Security numbers (SSNs) for your business. They allow the Internal Revenue Service (IRS) to recognize your business for the purpose of paying taxes.
EINs are used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, self-employed individuals, and other business entities. Banks also typically require them when applying for a business bank account.
Thankfully, obtaining an EIN is a free and quick process. The IRS provides guidelines that help business owners understand when it's time to get an EIN. They've also offered business owners a few options for applying (online, mail, phone, and fax). Whichever you choose is simply a matter of preference.
- EINs are nine-digit numbers that let the IRS recognize your business for tax purposes.
- You can obtain EIN online, over the phone, by fax, or by mail.
- There is no cost to apply for or obtain an EIN.
- No matter which method you choose, getting an EIN is an easy process.
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Should You Apply For an EIN?
Before you spend time filling out an application, it's best to take a minute to determine whether your business requires an EIN.
The IRS provides some useful guidelines to help you decide if your business needs an EIN based on your answers to the following questions:
- Does your business hire employees?
- Do you operate your business as a corporation or partnership?
- Do you file tax returns for employment, excise, or alcohol, tobacco, or firearms?
- Do you withhold taxes on income, other than wages paid, to a non-resident alien?
- Do you have a tax-deferred pension, also referred to as a Keogh plan?
- Are you involved in trusts, estates, non-profit organizations, farmers' co-ops, or real estate mortgages?
Did you answer "yes" to any of these questions? If so, read on to find out how to get an EIN for your business.
There are three primary ways you can apply for an EIN for your small business: online, by phone, or by mail. If you want to save yourself time on the phone or a postage stamp, online is the most convenient way to go. If the IRS can validate the information you enter, an EIN is issued to you immediately. Mail is the slowest option, taking about four weeks from the date the IRS receives your application.
Importance Of an EIN
Getting an EIN should be at the top of your list of things to do to get your small business up and running. Not obtaining an EIN delays many essential business functions. The most important of these functions is using the Electronic Federal Tax Payment System (EFTPS) and filing election forms and returns to the IRS.
What if You Employ Domestic Help in Your Home?
Suppose you employ household employees, including housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employee. In that case, chances are you will need to pay taxes on that person.
Also, generally speaking, you will not need to pay any employment taxes for using an independent contractor or other persons who provide their services that are not your employees. Learn more about payroll taxes on the IRS website or speak to a qualified business attorney specializing in taxation.
For more detailed information on determining whether you should obtain an EIN, refer to the IRS publication Understanding Your EIN. To get an EIN, you must complete IRS Form SS-4. It is a good idea to apply for an EIN before you open for business so you can be ready to go come tax season. Most banks will require an EIN to open a corporate or partnership bank account.
Still wondering if it's the right time for an EIN? Taxation can be complicated stuff, especially with all the tasks that come with starting a new business. When you have questions, it's always best to contact a business lawyer who will cater their skillset and know-how to your specific questions.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
Contact a qualified business attorney to help you navigate your business's taxes.