An Employer Identification Number (EIN) is issued by the Internal Revenue Service (IRS) to identify a business entity. It’s also known as a Federal Tax Identification Number.
You need to get an employer identification number if you have employees or if you operate your business as a corporation or partnership. Corporations and partnerships must use an EIN when filing taxes and other business activities, such as opening bank accounts and applying for employer tax accounts with state revenue agencies.
That said, this article outlines how to obtain an Employer Identification Number.
Why Do You Need An Employer Identification Number?
To identify business entities, the Internal Revenue Service (IRS) issues each of them an EIN. So, if you’re operating a business or intend to do so, you’ll need to get a employer identification number. It’s also known as a Federal Tax Identification Number.
If you own your own company, then you need one of these numbers. They are necessary for any business tax return filing, such as payroll or sales taxes.
The most obvious benefit of having an EIN is that it makes filing taxes easier for you. You’ll be able to use this number when reporting income for your business and can use it as an identifier when applying for specific licenses or permits.
Having an EIN also makes it easier for the IRS to track your finances and send you any correspondence related to your taxes. Also, it will help protect your personal information from being exposed publicly through forms filed with the IRS or other agencies such as state unemployment departments.
How Do You Obtain An Employer Identification Number?
There are ways to obtain your Employer Identification Number (EIN) to enact your business identity with the law. Here is how you can obtain an EIN:
- Apply Online
You can apply for an EIN online by visiting the IRS website and clicking on the ‘Apply for an EIN Online’ link. You’ll need to provide a valid email address and a credit card before getting started. Once you’ve applied, the IRS will review your application within 24 hours and send you an approval or denial notice via email within two days of application.
- Apply Via Fax Or Mail
If you don’t have access to a computer or fax machine, you can still apply for an EIN by mail. Simply print the EIN application form and send it with your other supporting documents. You’ll have to pay the IRS an additional fee to use the mail-in method as this costs more than applying online. Fees vary from one type of corporation to the other.
- Call In
If you prefer to call the IRS, it is another option to consider. You’ll need to confirm your identity and provide the same information as above: business name, address, and type of business. Once you’ve provided this information and either faxed or mailed in your application with an EIN card, you will receive a confirmation letter from the IRS within three weeks confirming that they have received your request.
- Name of Responsible Party
The responsible party’s name is the person who is legally responsible for the company. This can be:
- The owner(s): The IRS expects you to provide your name if you’re legally responsible for the company. This is one of the most important details needed for obtaining your EIN.
- A designated officer or partner: This individual will be responsible for filing your tax returns and should also receive all correspondence from the IRS.
It’s crucial to note that the name or names responsible for the company should be provided correctly.
- Business Address Or Location
To obtain an EIN, you must have a valid address where your business is located. It can be a physical address, or it can be a mail forwarding service that has a valid physical address.
The IRS wants to know where the business is actually being conducted and not just where you are located. You cannot obtain an EIN if you do not have this information.
- Type Of Business Being Conducted
If you’re not a sole proprietorship, you must also provide the business type (more on that below). The IRS uses the first three digits of your EIN to identify the type of business being conducted. They assign each activity a specific number, called an ‘Activity Code.’
The activity code is used to identify what kind of business you are conducting and whether or not it’s taxable. For example, if your business is engaged in manufacturing goods, your EIN will end with a number different from someone whose company provides management services for hedge funds or private equity firms. Your type of company also depends on the basis of needing a W-9 form.
- Answer To A Security Question
You can also use a security question as your EIN. The answer to the security question is used for verification purposes only and isn’t publicly available.
You aren’t required to provide a Social Security Number (SSN) if you don’t want to. Still, if you include an SSN on your application, it’ll be verified by the Social Security Administration (SSA).
If the SSA doesn’t match your SSN with their records or if they don’t accept non-numeric characters in your SSN, then you can’t use that number as part of obtaining an EIN. It may happen if someone’s trying to commit fraud by submitting false information during registration or if they were previously issued two different types of social security numbers, one with only numbers and one with letters in addition to numbers.
- Visit Taxpayer Assistance Center
Another option to obtain your Employer Identification Number is to visit an IRS Taxpayer Assistance Center (TAC). The TACs are located throughout the country and open during regular business hours.
Also, if you are eligible, you may be able to use a third-party service provider that has contracted with the International Revenue Service (IRS) to provide EIN services to individuals who do not have an Employer Identification Number yet but need one to open a bank account or obtain employment.
Conclusion
With all of the different ways to apply for an EIN, it’s important to remember that you can always call the IRS if you’re unsure of what form you need or how to fill it out. They will be more than happy to assist you in any way they can get so that you get your number as quickly as possible.
