A federal Employer Identification Number, often known as an EIN or FEIN, is a nine-digit taxpayer identification number that assists the IRS in identifying your business. Consider it your company’s social security number: you use it to file and pay your business taxes.
You may come across phrases like FTIN (federal tax identification number) while looking for an EIN, but don’t let them confuse you. Individuals’ FTINs are their social security numbers, whereas business entities’ FTINs are their EINs.
who requires an EIN?
If any of the following are true, you must have an EIN:
- Employees other than you work for your business.
- Your company is a corporation (such as a C corporation or a S corporation) or a partnership (which involves general and limited partnerships). Even a single-member LLC must get an EIN if it intends to hire staff.
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- Your company provides a Keogh pension plan.
- Your company withholds taxes on income other than wages paid to non-resident aliens.
- Your company manages trusts (except certain grantor-owned revocable trusts, IRAs, and exempt organization businesses), non-profit organizations, income tax returns, estates, real estate mortgage investment conduits, farmers’ cooperatives, or plan administrators.
In other words, many individuals who are just starting out in business require an EIN.
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The only type of business that is not obliged to have one is a sole proprietorship with no workers. Sole proprietors are typically independent consultants and freelancers, but they can also be a variety of one-man shows.
However, some sole proprietors obtain EINs to keep their social security numbers hidden (mainly if they work with a variety of clients).
Having an EIN also makes completing other tasks on your to-do list much more manageable.
Do you want to open a bank account in your company’s name?
Or do you provide 1099 forms to the independent contractors you hire?
then you’ll need an EIN!
If you’re wondering whether you need an EIN, your accountant can tell you yes or no in approximately two seconds.
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how to apply for an EIN?
Obtaining an EIN is something you can do on your own. Obtaining an employment ID number is simple and free.
Here are three simple ways to do it yourself:
fill out an online application
This is how the majority of people will obtain their EIN.
- Use this IRS test if you’re unsure you need an EIN. You’ll be put through an EIN enrollment sequence if you answer yes to any questions.
- If you already know you need an EIN, skip to the application page.
Send your application by mail or fax. Download IRS Form SS-4: Application for Employer Identification Number if you prefer to send it via mail. Fill it out and fax or send it in to receive your EIN within four weeks.
apply over the phone
If you are from another country, you will most likely have to register by phone. (Applicants from the United States are not eligible to use this procedure.) Dial the IRS Business and Specialty Tax Line at 800-829-4933, answer a few questions, and you’ll have your EIN immediately (but not your formal EIN confirmation notification).
The IRS instructions for finishing the process can be found here.
when will I receive my EIN?
When you apply online or by phone, you will typically receive your EIN instantly. A faxed application will take approximately one week to process, while mailed-in applications may take up to four or five weeks to process.
Keep the papers in a safe location once you’ve received them. It is essential to include your legal name, EIN, and withholding tax deposit schedule. You’ll also need this number when filing federal Payroll and business income taxes, as well as when registering as an employer with most state and local taxing authorities. This number is frequently needed for filing and paying state and municipal taxes.
