If you’re starting a new business or making significant changes to an existing one, you will likely need to apply for an Employer Identification Number (EIN). An EIN is a unique nine-digit tax identification number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States. It functions much like a Social Security Number for individuals, but for entities. Securing an EIN is a fundamental step for many businesses, enabling them to hire employees, open bank accounts, and file various tax returns. Understanding the process to apply for an Employer Identification Number is vital for compliance and operational efficiency.
Understanding the Employer Identification Number (EIN)
An Employer Identification Number, often simply called an EIN, is essential for identifying businesses for tax purposes. It allows the IRS to track your business’s tax obligations and activities. Without an EIN, many critical business functions cannot be performed. This unique identifier is fundamental for nearly all types of businesses.
Why Do You Need to Apply For an Employer Identification Number?
There are several compelling reasons why a business must obtain an EIN. This number is required for various legal and financial operations, ensuring your business remains compliant with federal regulations. The necessity to apply for an Employer Identification Number arises from specific business activities.
You will need an EIN if your business:
Has employees.
Operates as a corporation or partnership.
Files employment, excise, or alcohol, tobacco, and firearms taxes.
Withholds taxes on income, other than wages, paid to a non-resident alien.
Has a Keogh plan.
Involves certain types of organizations, such as trusts (other than certain grantor trusts), IRAs, exempt organization business income tax returns, and real estate mortgage investment conduits.
Even if you don’t have employees, certain business structures, like LLCs filing as corporations, may still need an EIN. It’s always best to consult the IRS guidelines or a tax professional to determine if you need to apply for an Employer Identification Number.
Information Required Before You Apply For Employer Identification Number
Before you begin the process to apply for an Employer Identification Number, gathering all necessary information is crucial. Having these details ready will streamline your application and prevent delays. Accuracy in this step is paramount for a successful application.
You will need the following information:
Legal Name of the Entity: This should be the official registered name of your business.
Trade Name (if applicable): Also known as a Doing Business As (DBA) name.
Physical Address: The primary location of your business.
Mailing Address: Where the IRS should send correspondence.
Responsible Party’s Information: This is the individual or entity that controls, manages, or directs the applicant entity and the disposition of its funds and assets. For sole proprietors, this is the owner; for corporations, it’s typically the principal officer. You will need their name and Taxpayer Identification Number (SSN, ITIN, or existing EIN).
Type of Entity: Such as sole proprietorship, partnership, corporation, LLC, estate, trust, etc.
Reason for Applying: For example, started a new business, hired employees, changed organizational type, etc.
Date Business Started or Acquired: The month, day, and year your business began operations.
Closing Month of Accounting Year: Typically December for most businesses.
Highest Number of Employees Expected in the Next 12 Months: This includes agricultural, household, and other employees.
Principal Business Activity: A brief description of what your business does.
Having these details readily available will make the application process much smoother when you decide to apply for an Employer Identification Number.
How to Apply For Employer Identification Number (Step-by-Step)
The IRS offers several methods to apply for an Employer Identification Number. The online application is generally the quickest and most preferred method for most applicants. Choose the method that best suits your situation.
1. Online Application (Recommended)
The fastest and easiest way to apply for an Employer Identification Number is online through the IRS website. This service is available during specific hours, usually Monday to Friday, and allows you to receive your EIN immediately upon completion. The system guides you through each step, ensuring all required information is captured.
Visit the IRS website and locate the online EIN application (Form SS-4, Application for Employer Identification Number).
Follow the prompts to enter all required business and responsible party information.
Verify all details for accuracy before submitting.
Upon successful submission, your EIN will be issued instantly.
Print or save the confirmation for your records.
It is crucial that the responsible party has a valid Taxpayer Identification Number (SSN, ITIN, or existing EIN) to use the online application. If the responsible party is an entity, they must have an existing EIN.
2. Fax Application
If you prefer not to apply online or if you are an international applicant, you can fax Form SS-4. This method allows you to send the completed form directly to the IRS. While not as immediate as the online option, it is a viable alternative.
Download Form SS-4 from the IRS website.
Fill out the form completely and accurately.
Fax the completed form to the appropriate IRS fax number, which can be found in the Form SS-4 instructions.
Expect to receive your EIN by fax within approximately four business days.
3. Mail Application
For those who prefer traditional mail, you can send your completed Form SS-4 to the IRS. This method is the slowest, so plan accordingly if you choose this option. It might be suitable if you are not in a hurry to receive your EIN.
Download and complete Form SS-4.
Mail the form to the IRS address specified in the Form SS-4 instructions.
The processing time for mailed applications can take several weeks.
Your EIN will be mailed back to you once processed.
4. Telephone Application (International Applicants Only)
International applicants who do not have a legal residence, principal place of business, or principal office or agency in the U.S. can apply for an EIN by telephone. This is a specialized service for non-U.S. residents. You must be authorized to receive the EIN and answer all questions during the call.
Call the IRS at +1-267-941-1099 (this is not a toll-free number).
Be prepared to provide all information from Form SS-4 verbally.
The IRS representative will provide you with the EIN immediately over the phone if your application is approved.
Common Questions When You Apply For Employer Identification Number
Many business owners have similar questions when navigating the process to apply for an Employer Identification Number. Addressing these common concerns can help clarify the process further.
How long does it take to get an EIN?
If you apply for an Employer Identification Number online, you can receive your EIN immediately. Fax applications typically take about four business days, while mail applications can take several weeks. Telephone applications for international applicants also provide an immediate EIN.
Is there a fee to apply for an EIN?
No, there is absolutely no fee to apply for an Employer Identification Number directly through the IRS. Be wary of third-party services that charge a fee for this service, as you can easily obtain it for free.
Can I have more than one EIN?
Generally, a business entity is assigned only one EIN. However, certain changes to a business’s legal structure, such as converting from a sole proprietorship to a corporation, may require a new EIN. It’s important not to apply for a new EIN if your business structure has not fundamentally changed.
What if I made a mistake on my application?
If you discover an error after you apply for an Employer Identification Number, you should contact the IRS directly to correct the information. Depending on the nature of the error, you might need to submit a written request for correction.
Maintaining Your EIN Information
Once you apply for an Employer Identification Number and receive it, it’s crucial to keep your EIN information updated with the IRS. Changes to your business name, address, or responsible party should be reported. Proper maintenance ensures that you receive important tax documents and remain compliant.
If your business undergoes significant changes, such as a change in legal structure or ownership, you may need a new EIN. Always consult IRS guidelines or a tax professional to determine if a new EIN is necessary or if merely updating your existing information suffices.
Conclusion
Applying for an Employer Identification Number is a fundamental step for many businesses. Whether you are starting a new venture, hiring employees, or changing your business structure, obtaining an EIN is essential for tax compliance and operational legitimacy. By understanding the requirements and following the clear steps outlined, you can efficiently secure this vital identifier. Take the proactive step to apply for an Employer Identification Number today to ensure your business is properly registered and ready to operate.