Obtaining an Employer Identification Number (EIN): The Ultimate Guide
As a business owner, applying for an Employer Identification Number (EIN) is an essential step for your business to conduct business. An EIN, also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify your business. In this comprehensive guide, we will walk you through the entire process of obtaining an EIN, including how to determine if you need one, how to apply for one, how long it takes to receive your EIN, and what to do if you lose it.
If you would prefer the IRS version, you can visit their website and download Publication 1635, Employer Identification Number Understanding Your EIN.
Do You Need an EIN?
In most cases, businesses are required to obtain an EIN. If your business has employees, operates as a partnership or corporation, or has a retirement plan, you must obtain an EIN. Additionally, if you withhold taxes on income other than wages paid to a non-resident alien, you must also obtain an EIN. Good luck trying to open a bank account without an EIN!
Do You Need a New EIN?
If your business undergoes a change in ownership or structure, you may need to obtain a new EIN. For instance, if you change from a sole proprietorship to a corporation, you will need to apply for a new EIN. To determine if you need a new EIN, refer to the guidelines provided by the IRS.
How to Apply for an EIN
There are several ways to apply for an EIN, including online, by mail, by fax, or by phone. However, the quickest and easiest way to apply for an EIN is online. The IRS offers a free online EIN application that allows you to get your EIN immediately upon completion.
To apply for an EIN online, you need a valid Taxpayer Identification Number (TIN), which could be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or prove that the Responsible Party does not have an SSN or ITIN. You will be required to answer a series of questions about your business, including its legal name, the type of entity, the number of employees, and the nature of your business activities. You will also need to disclose the name and TIN of the responsible party who controls, manages, or directs the applicant entity and the disposition of its funds and assets. If the responsible party does not have an SSN, then the application cannot be made online, and it will take much longer to obtain.
How Long Will it Take to Get Your EIN?
If you apply for an EIN online, you can get your number immediately upon completion of the application. If you apply by mail, it may take weeks or months to receive your EIN. If you apply by fax, you can expect to receive your EIN within four business days, if there are no government shutdowns, bad weather, pandemics or delays caused by budget cuts, tax season or IRS equipment breakdowns, all of which have happened in the recent past.
Lost or Misplaced Your EIN?
If you lose or misplace your EIN, go through your records of previous tax returns, contact your bank or anywhere else you may have used your EIN in the past. This is preferable to the final alternative: you can retrieve it by contacting the IRS Business & Specialty Tax Line.
Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at 800-829-4933. The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistor will ask you for identifying information and provide the number to you over the telephone, as long as you are a person who is authorized to receive it. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate. Good luck trying this route!
Obtaining an EIN is an essential step in ensuring that your business operates legally, can open a bank account and meets its tax obligations. Applying for an EIN is a relatively simple and straightforward process. Remember, most businesses are required to obtain an EIN, so make sure to determine if your business needs one and obtain it as soon as possible after formation.