An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is like a Social Security Number for your business.
Are you ready to unlock the doors to your business's financial future and legitimize its operations? Getting an EIN is a crucial step, and while it might seem daunting, it's a straightforward process when you know the steps. Let's dive in!
Navigating the EIN Application Process: A Step-by-Step Guide
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Step 1: Understand Why You Need an EIN and Confirm Eligibility
Before you even think about filling out a form, take a moment to confirm if you truly need an EIN. While many businesses do, some, like sole proprietors without employees, might not.
Common Reasons for Needing an EIN:
- Hiring Employees: If you plan to hire employees, an EIN is mandatory for tax reporting (payroll taxes, etc.).
- Operating as a Corporation or Partnership: All corporations and partnerships are required to have an EIN.
- Operating as a Multi-Member LLC: If your LLC has more than one member, you will need an EIN.
- Filing Excise Taxes: If your business deals with specific goods or services that require excise tax filings.
- Withholding Taxes on Non-Wage Income: For payments made to non-resident aliens.
- Establishing a Trust, Estate, or Non-Profit Organization: These entities generally require an EIN.
- Opening a Business Bank Account: Most banks require an EIN to open a business checking or savings account.
- Applying for Business Licenses or Permits: Many state and local agencies require an EIN as part of the licensing process.
- Operating as a Sole Proprietorship with Employees: While sole proprietors can typically use their Social Security Number, if you have employees, an EIN is necessary.
Important Note: If you're a sole proprietor without employees and you don't file excise or pension tax returns, you can generally use your Social Security Number (SSN) as your taxpayer identification number. However, many sole proprietors still opt for an EIN for professional reasons, such as separating business and personal finances, or for enhanced privacy by not using their SSN for business dealings.
Step 2: Determine Your Business Entity Type and Responsible Party
The IRS needs to know what kind of business entity you are and who is the main point of contact. This information is crucial for accurate record-keeping.
QuickTip: Look for lists — they simplify complex points.
Sub-heading 2.1: Identify Your Legal Business Structure
Your legal structure dictates how you apply for your EIN and how you file your taxes. Common structures include:
- Sole Proprietorship: An unincorporated business owned by one individual.
- Partnership: An unincorporated business with two or more owners.
- Limited Liability Company (LLC): A business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited
liability of a corporation. - Corporation
(C-Corp or S-Corp): A legal entity separate from its owners, offering limited liability. - Estate: A legal entity that holds the assets and liabilities of a deceased person.
- Trust: A legal arrangement where one party (the trustee) holds property for the benefit of another party (the beneficiary).
- Non-Profit Organization: An organization formed for purposes other than making a profit.
Sub-heading 2.2: Identify the "Responsible Party"
The "Responsible Party" is the individual who controls, manages, or directs the applicant entity and the disposition of its funds and assets. This person must have a valid Taxpayer Identification Number (SSN, ITIN, or another EIN). For most entities:
- Sole Proprietorship: The sole proprietor.
- Partnership: One of the partners.
- LLC: A member or managing member (if single-member LLC, it's the owner).
- Corporation: An officer of the corporation.
Crucial Detail for Foreign Applicants: If you are not a U.S. citizen or do not have an SSN/ITIN, you can still obtain an EIN. While the online application requires an SSN or ITIN for the responsible party, you can apply by phone, fax, or mail. In these cases, the responsible party does not need to have a U.S. SSN or ITIN. You will simply indicate "Foreign" on the SS-4 where the SSN/ITIN is requested.
Step 3: Gather Necessary Information (Form SS-4 Details)
Regardless of the application method, you'll be providing the same information found on Form SS-4, Application for Employer Identification Number. Having this information ready before you start will significantly speed up the process.
Here's what you'll typically need:
Tip: Don’t skim past key examples.
- Legal Name of the Entity: This should match your legal formation documents (e.g., Articles of Organization for an LLC).
- Trade Name (Doing Business As - DBA), if applicable: If your business operates under a name different from its legal name.
- Mailing Address: The address where you want to receive IRS correspondence.
- Street Address: The physical location of your business (cannot be a P.O. Box unless it's a designated street address from a private mail service).
- Name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the Responsible Party: As identified in Step 2.
- Reason for Applying: Common reasons include "Started new business," "Hired employees," "Banking purposes," or "Changed type of organization."
- Date Business Started or Acquired: The date your business began or will begin operations.
- Closing Month of Accounting Year: This is your fiscal year end. For many, it's December.
- Highest Number of Employees Expected in the Next 12 Months: This helps the IRS classify your business.
- First Date Wages or Annuities Were Paid (if applicable): If you've already started paying employees.
- Primary Business Activity/Industry: Choose the category that best describes what your business does.
- Whether you want to file Form 944: This is for small employers who expect to owe $1,000 or less in employment taxes for the calendar year.
Step 4: Choose Your Application Method
The IRS offers several ways to apply for an EIN. Your choice will depend on how quickly you need the EIN and your eligibility.
Sub-heading 4.1: Online Application (Recommended for Most U.S. Applicants)
This is by far the fastest and most preferred method if you are eligible.
- Eligibility: Your principal business, office, or agency, or legal residence must be located in the U.S. or U.S. Territories. The responsible party must have a valid SSN or ITIN.
- Availability: Monday through Friday, 7:00 a.m. to 10:00 p.m. Eastern Time.
- Process:
- Go to the official IRS website:
www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein. - Click on "Apply Online Now" and then "Begin Application."
- You will be guided through an interview-style questionnaire. Answer all questions accurately based on the information you gathered in Step 3.
- Crucially, the entire online application must be completed in one session. The system will time out after 15 minutes of inactivity. You cannot save and return later.
- Once submitted, the information is validated, and your EIN is issued immediately on the screen.
- Print or save the EIN confirmation letter immediately! You will not be able to retrieve it online later.
- Go to the official IRS website:
Sub-heading 4.2: Fax Application
If you can't apply online or prefer a paper trail, faxing is a good option.
- Eligibility: All applicants.
- Process:
- Download Form SS-4 (PDF) from the IRS website.
- Fill out the form completely and accurately.
- Make sure you include your fax number on the form if you want the EIN faxed back to you.
- Fax the completed Form SS-4 to the appropriate IRS fax number:
- For U.S. businesses: 855-641-6935
- For International applicants: 855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.)
- Processing Time: You'll typically receive your EIN via fax within four business days if you provide a fax number.
Sub-heading 4.3: Mail Application
This is the slowest method, but a viable option if you don't need the EIN urgently or if other methods aren't suitable.
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- Eligibility: All applicants.
- Process:
- Download Form SS-4 (PDF) from the IRS website.
- Fill out the form completely and accurately.
- Mail the completed Form SS-4 to the appropriate IRS address:
- For U.S. businesses: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
- For International applicants: Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999
- Processing Time: Expect to receive your EIN in about four weeks by mail.
Sub-heading 4.4: Telephone Application (Primarily for International Applicants)
This method is specifically designed for international applicants who have no legal residence, principal place of business, or principal office/agency in the U.S. or U.S. Territories.
Tip: Write down what you learned.
- Eligibility: Primarily for international applicants.
- Availability: Monday through Friday, 6:00 a.m. to 11:00 p.m. Eastern Time.
- Process:
- Have all the information from Form SS-4 (Step 3) readily available.
- Call the IRS Business & Specialty Tax Line for international applicants: +1 (267) 941-1099 (this is not a toll-free number, international call rates apply).
- An IRS assistor will ask you the questions from Form SS-4 and assign you the EIN over the phone.
- Make sure to write down the EIN immediately!
Step 5: Receive and Utilize Your EIN
Once you receive your EIN, congratulations! You've taken a significant step toward formalizing your business.
- Immediate Use (Online/Phone): If you received your EIN online or by phone, you can often use it immediately for many purposes, such as opening a business bank account or applying for certain licenses.
- Delayed Use for Electronic Filings: The IRS advises waiting up to two weeks before using your new EIN for electronic tax filings (e-file a tax return) or making electronic tax deposits. This allows the EIN to be fully uploaded into the IRS's permanent records.
- Confirmation Letter: For mail and fax applications, the IRS will send a physical confirmation letter of your EIN. Keep this document safe for your records. For online applications, you must print or save the confirmation at the time of issuance.
- Storing Your EIN: Keep your EIN in a secure place. You'll need it for various business activities, including filing taxes, applying for loans, and setting up payroll.
Frequently Asked Questions (FAQs) about Obtaining an EIN
Here are 10 common "How to" questions related to EINs:
How to know if I already have an EIN?
Check previous tax returns, contact the bank where you have a business account, or check with state/local agencies where you've applied for licenses. If you still can't find it, call the IRS at 800-829-4933 (Monday-Friday, 7 a.m. to 7 p.m. ET).
How to get an EIN if I'm a foreign person without an SSN or ITIN?
You cannot use the online application. You must apply by phone (+1-267-941-1099), fax (855-215-1627 within the U.S., or 304-707-9471 outside the U.S.), or mail (Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999). You will indicate "Foreign" where the SSN/ITIN is requested on Form SS-4.
How to fill out Form SS-4 correctly?
Carefully read the instructions for Form SS-4 available on the IRS website. Pay close attention to your entity type (Line 9a), reason for applying (Line 10), and the responsible party's information (Lines 7a and 7b). Double-check all addresses and dates for accuracy.
QuickTip: Skim the ending to preview key takeaways.
How to get an EIN for an LLC?
If your LLC has employees or multiple members, you need an EIN. If you're a single-member LLC, you generally don't need one unless you have employees or choose to be taxed as a corporation. Apply online if you have an SSN/ITIN, or via fax/mail/phone if not.
How to get an EIN for a non-profit organization?
Non-profit organizations are required to obtain an EIN. The process is the same as for other entities; you'll select "Other nonprofit organization" on Line 9a of Form SS-4. Ensure your organization is legally formed before applying.
How to get an EIN for a sole proprietorship?
A sole proprietorship typically uses the owner's SSN, but an EIN is required if you have employees or file excise or pension tax returns. You can also apply for an EIN even if not required, for business banking or privacy reasons.
How to get an EIN for a partnership?
All partnerships are required to obtain an EIN for federal tax purposes. You will select "Partnership" on Line 9a of Form SS-4.
How to use your EIN once you receive it?
You can immediately use your EIN to open business bank accounts, apply for business licenses and permits, and set up payroll. For electronic tax filings or payments, it's recommended to wait up to two weeks for the EIN to be fully processed by the IRS.
How to find your EIN if you've lost it?
First, check any IRS correspondence you've received, like notice of your EIN assignment. Look at past business tax returns or contact your bank if you opened a business account with it. If all else fails, call the IRS Business & Specialty Tax Line at 800-829-4933 and state that you need to retrieve a lost EIN.
How to get a new EIN if my business structure changes?
Generally, you will need a new EIN if your business ownership or structure changes significantly (e.g., a sole proprietorship becomes a corporation, or a partnership converts to an LLC). Changing your business name, address, or responsible party does not typically require a new EIN.
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