What is an EIN?
An EIN is an Employer Identification Number, which is a 9-digit federal tax ID. It follows this format: XX-XXXXXXX. This ID is issued to all US businesses in order to identify the business federally. Essentially, it’s a social security number for your business. Although it isn’t required for all businesses, it’s needed to pay taxes, open a business bank account, hire employees, and acquire various licenses and permits for your business.
Why is it important?
The purpose of EINs is incredibly versatile beyond identification and taxes. EINs make it easier to set up payroll for employees, help secure loans or establish credit for your business, help establish operations abroad, allow you to create partnerships, and access certain tax benefits.
Where can I find it?
If you know you have an EIN, but aren’t sure where it is, there are a couple of key places to look.
- Original Confirmation Notice
- Previous Tax Returns
- Business Documents such as bank accounts or loan applications, state or local business applications, and payroll paperwork
If you are still unable to find your EIN, contact the IRS.
Who needs an EIN?
The IRS states that anyone matching any of the following criteria needs an EIN:
- Hire Employees
- Operate as a corporation or partnership
- File certain tax returns
- Withhold taxes on income other than wages
- Have a tax-deferred pension plan.
- Work with specific organizations
If you don’t meet these requirements, you may still decide that an EIN is beneficial for your organization.
How can I get an EIN for my business?
EINs are free to apply for, and it is important that you apply for one as soon as you register your business. You can apply online through the IRS website. As soon as your application is approved, you will receive your EIN. You are also able to apply for an EIN via fax or mail if filing online isn’t an option for you.
The process of applying is fairly quick, often taking only about 10 minutes. Before you file, there are a few considerations you need to make, such as who will be the responsible party for your business, who will be the main point of contact with the IRS, and more. To file, you need the full name of your business, the mailing address/physical address if applicable, of your business, your entity type, and your primary activities and expected employees. Finally, you will have to state the reason you are applying for an EIN. The process may change slightly based on the type of business you are applying for.
- EINs are the way businesses are identified in the United States.
- EINs make it easier to pay employees and get loans or credit for your business.
- You should have an EIN if you hire employees, operate as a corporation, work with specific organizations, etc.