A federal tax identification number or employer identification number (EIN) is a nine digit number required by the Internal Revenue Service (IRS) for all corporations, partnerships, individual proprietors who have employees, and certain other entities. This is a unique identification number that allows the government to properly track tax payments and tax return filings for a business. A social security number (SSN) is the equivalent tax identification number for individuals. If you are a sole proprietor with no employees, in most cases, you can continue to use your social security number for tax payments and filing.
Obtaining an EIN number is simple and can be accomplished online. Visit the IRS at this website address. The site will lead you through a series of questions to identify your business and type of operations. Once you successfully complete the online application, your EIN will be issued immediately. You can print a confirmation for your records. Alternatively, you may apply by telephone. You can also choose to apply on paper and submit the application by fax or mail, but processing for paper forms can take four weeks. This is a free service provided by the IRS. There is no fee for this application. Applicants who are not located within the United States or its territories may not apply online, but must use one of the other methods.
You will be asked to provide the following information: the legal name of your business, the trade name (if applicable), the name of the executor, administrator, or trustee (if applicable), the mailing address, the street address, if different from the mailing address, and the county and state where the business is located. You must provide the name of the responsible party, such as the sole proprietor or a corporate officer, and that person’s SSN.
You will be asked if your business is a limited liability company, and, if so, how many members it has and whether it was organized outside the United States. You will need to know the type of entity of your business, i.e. sole proprietor, corporation, etc. For a corporation, you will need to know where it was incorporated, either the state or a foreign country. You must provide the reason for applying, i.e. started a new business or hired employees, the date the business began, and the closing month of the accounting year.
For many entities, the accounting year is the same as a calendar year. You will be asked for the highest number of employees expected for the year and the date when wages were first paid. You will provide the principal activity of your business and its principal line of merchandise or type of services rendered. And, finally, you will be asked if the entity named in the application has ever applied for an EIN before, and, if so, you must list the prior EIN.
It will simplify the process if you have the answers to all the questions available before you begin the application, whether you do it online or fill out a form. If you have any questions about the process, there is further information available on the IRS website, as well as detailed instructions.