Omar Bennett
An Employer Identification Number (EIN) is a unique, nine-digit number that is required by the IRS for businesses to open bank accounts, apply for credit, and file tax returns. It is also known as a Federal Tax Identification Number. While it is not required for self-employed individuals, it is beneficial as it keeps their personal finances separate from those of their business. Obtaining an EIN is free and can be done online, by phone, fax, or mail. Once assigned, an EIN is forever associated with a business and is never reissued to another business, even if the original employer goes out of business. So, does having an EIN constitute the tax year?
| Characteristics | Values |
|---|---|
| Purpose | Tax reporting, opening bank accounts, applying for credit |
| Who needs it | Businesses with employees, corporations, partnerships, certain tax returns (employment, excise, alcohol, tobacco, firearms), those who withhold taxes on income other than wages paid to non-resident aliens, businesses with a Keogh plan |
| How to apply | Online, by phone, fax or mail |
| Application requirements | Name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor |
| Time taken | Immediate for online applications, 1 week for fax applications, 4-6 weeks for mail applications |
| Cost | Free |
| Validity | Never expires |
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Applying for an EIN
There are several methods to apply for an EIN, including online, by phone, fax, or mail. The online application is the fastest method, often providing immediate access to your EIN. To apply online, visit the IRS website and navigate to the EIN application webpage. The application will prompt you to provide information about your business, such as its legal and tax structure, number of members, physical location, and trade name. You will also need to specify whether your business is a Limited Liability Company (LLC), a corporation, or an S corporation for tax purposes.
If you are unable to apply online, you can fax or mail Form SS-4, the Application for Employer Identification Number, to the IRS. This process typically takes about four business days if done by fax and four weeks if done by mail. When applying by fax, ensure you provide a fax number to receive the Assignment Notification. If mailing, send the completed form to the IRS address in Cincinnati, Ohio. Additionally, you can call the IRS during their operating hours to receive assistance with the application process.
It is important to note that you may need to reapply for an EIN if you change your entity's ownership or structure. However, a new EIN is not required when changing your business name, address, or responsible party. Additionally, if you have multiple EINs and are unsure which one to use, you can contact the Business and Specialty Tax Line for guidance.
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EIN requirements
To apply for an Employer Identification Number (EIN), your principal place of business must be in the US or US territories. You must be the responsible party in control of the entity or its authorized representative, and you must have the responsible party's Social Security or individual taxpayer ID number (ITIN).
You can apply for an EIN online, by phone, fax, or mail. If your principal place of business is outside the US, you must apply by phone, fax, or mail. Only government entities may apply with an EIN.
The processing time for an EIN application received by mail is four weeks. If you apply online, you will receive your EIN immediately upon approval. If you apply by fax and provide a fax number, the IRS will fax an Assignment Notification to you within four business days.
Once you receive your EIN, you will automatically be enrolled in the Electronic Federal Tax Payment System (EFTPS) so you can make all your deposits online or by phone. You will receive your EFTPS enrollment confirmation, a Personal Identification Number (PIN), and complete instructions for using EFTPS within a few days.
If your tax return is due and you haven't received your EIN, write "Applied For" and the date you applied in the space for the number. If you don't have your EIN by the time a deposit is due, send your payment to the service center address for your state. Make your check or money order payable to the Internal Revenue Service, and include your name, address, kind of tax, period covered, and the date you applied for your EIN.
You need a new EIN when you change your entity's ownership or structure. You don't need a new EIN to change your business name, address, or responsible party.
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EIN uses
An Employer Identification Number (EIN) is used by the Internal Revenue Service (IRS) as a tax identifier for businesses. Once you receive an EIN, you must file the required tax returns or information returns. An EIN can be used to make tax deposits and pay taxes electronically. You will be automatically enrolled in the Electronic Federal Tax Payment System (EFTPS) when you receive your EIN, which will allow you to make all your tax deposits online or by phone.
If your tax return is due and you haven’t received your EIN, you can write “Applied For” and the date that you applied for it in the space shown for the number. If you don't have your EIN by the time a deposit is due, you can send your payment to the service center address for your state. You will need a new EIN when you change your entity’s ownership or structure, but not when you change your business name, address, or responsible party.
If you have taken over another employer's business, you must use your own EIN to report and deposit employment taxes, not the prior employer's EIN. If you have more than one EIN and aren’t sure which to use, you can call the Business and Specialty Tax Line. If your retirement trust EIN has been deactivated, you can re-establish it by sending the EIN in question, trust name, sponsor's or trustee's address, and contact information.
To apply for an EIN, your principal place of business must be in the U.S. or U.S. territories. You must be the responsible party in control of the entity or its authorized representative and have the responsible party’s Social Security or individual taxpayer ID number (ITIN). Only government entities may apply with an EIN.
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EIN alternatives
An Employee Identification Number (EIN) is a nine-digit tax identification number issued by the IRS to identify a business entity. It is used for various business purposes, such as hiring employees, opening bank accounts, and handling business taxes. While an EIN is important and useful for many reasons, there are some alternatives in specific cases. Here are some scenarios and alternatives to using an EIN:
- Business Credit Cards: Small business owners often apply for business credit cards using their Social Security Number (SSN). This usually requires a personal credit check and a good to excellent credit score. Some business credit card issuers, like Ramp, offer cards without requiring an SSN. Instead, they may ask for a foreign passport and proof of address.
- Tax Identification for Sole Proprietors: If you are a sole proprietor, you may use your Social Security Number (SSN) as your Tax Identification Number. This is because, in the eyes of the IRS, you and your business are the same entity, and your SSN serves as your tax identification.
- Business Operations without Hiring or Bank Accounts: In certain situations, a business may operate without the need for an EIN. If the business is small, has no employees, and does not require a business bank account, an EIN may not be necessary. However, it's important to note that an EIN can still be beneficial for tax purposes and separating business and personal finances.
- Alternative Forms of Business Identification: In some cases, a business may use other forms of identification for specific purposes. For example, when applying for a business license or permit, the business name, address, and other identifying information may be sufficient without the explicit need for an EIN.
It's important to note that while these alternatives exist, an EIN is often crucial for comprehensive business operations, tax compliance, and financial management. Each business's situation is unique, and professional advice should be sought to determine the best approach for your specific circumstances.
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Getting an EIN
An Employer Identification Number (EIN) is a unique business tax ID number that you can obtain online in a few minutes. The process of getting an EIN is simple and usually takes about 10 minutes to complete.
To be eligible to apply for an EIN online, your business must be physically located within the US or its territories. You must also identify a "responsible party" who is the person who controls, manages, or directs the business's day-to-day operations and has access to the business's funds. This person must have a valid Taxpayer Identification Number (TIN) such as a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or an existing EIN.
If your business is located outside the US, you can still obtain an EIN but you must apply by phone, mail, or fax. International applicants cannot apply online. The application process is free, so be cautious of companies that charge a fee to apply for an EIN on your behalf.
Once you receive your EIN, you will automatically be enrolled in the Electronic Federal Tax Payment System (EFTPS) so you can make all your tax deposits online or by phone. You will receive your EFTPS enrollment confirmation, a Personal Identification Number (PIN), and instructions by mail within a few days.
You can also apply for an EIN by fax or mail by filling out Form SS-4, Application for Employer Identification Number, and sending it to the IRS. If you provide a fax number on the application, you should receive a fax with the EIN within four business days. The processing time for a mailed application is about four weeks.
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Frequently asked questions
You can apply for an EIN online, by phone, fax or mail. The application is free and available on the IRS website.
All customers whose principal business, office or legal residence is located in the United States or in one of the U.S. Territories can apply for an EIN online.
You need to provide the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor.
An EIN is used for tax reporting purposes and allows businesses to open bank accounts and apply for credit.
Most businesses need an EIN. If your business has employees, is a corporation or partnership, files certain tax returns (employment, excise, or alcohol, tobacco, and firearms), withholds taxes on income other than wages paid to non-resident aliens, or has a Keogh plan, you need an EIN.
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