How to Obtain an Employer Identification Number (EIN)
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Discover why and how to get an Employer Identification Number (EIN), essential for many businesses.
What is a Federal ID Number?
An Employer Identification Number (EIN), also known as a Federal Tax ID Number (TIN), consists of nine digits. It serves various purposes related to tax filing, reporting, and other business documentation.
Instead of using your Social Security Number, the EIN can be utilized to:
- Obtain business licenses and permits.
- Apply for business credit cards.
- Set up business bank accounts.
By having an EIN, you establish a separation between yourself and your business. This separation can provide liability protection for your personal assets. Additionally, it offers privacy protection since fewer people will have access to your Social Security Number.
While obtaining a Federal Tax ID Number is optional for Sole Proprietorships, it is mandatory by law for businesses operating as C Corporations, Limited Liability Companies, or Partnerships
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Here’s How to Know if You Need an EIN
The IRS identifies the specific circumstances under which a business must have a Federal ID Number. In these situations, an EIN is required:
- The business has employees
- The business operates as a partnership or corporation
- The business has a Keogh plan (tax-deferred pension plan for small businesses and the self-employed)
- The business withholds taxes on income, other than wages, paid to a non-resident alien
- The business is involved with one or more of the following: most types of trusts, farmers’ cooperatives, estates, non-profit organizations, plan administrators, and real estate mortgage investment conduits
- The business files certain types of tax returns, including Employment, Excise, or Alcohol, Tobacco, and Firearms
Aside from the IRS requirements, an EIN serves the vital purpose of establishing a separation between a business and its owners, thus providing financial and legal liability protection of owners’ personal assets.
Also, for self-employed individuals, it can help retain privacy and prevent identity theft. Many self-employed small business owners choose voluntarily to apply for an EIN so that they don’t have to use their SSN on 1099 forms, business credit applications, sales tax invoices, and other business documents.
Here’s How You Can Apply for EIN
- Online – If your business is located within the United States (or U.S. Territories) and you have a valid taxpayer identification number (Social Security Number, Individual Taxpayer Identification Number, or other EIN), you can apply for an EIN online through the IRS website. However, note that the IRS cannot process your online application request if your business’s responsible party is an entity that previously obtained an EIN via the Internet. In that situation, you’ll need to apply using one of the other available methods. They include:
- By Fax – Fax the completed Form SS-4 application to the appropriate IRS service center fax number for your state.
- By Mail – Complete Form SS-4 and mail it to the IRS at the address they provide.
- By Phone – If you’re an international applicant, you may call the IRS at 267-941-1099 to obtain your EIN. If you ask someone to call on your behalf, that person must be authorized to receive the EIN and answer questions regarding Form SS-4.
- The taxpayer (responsible party) signs a completed Form SS-4, including the third-party designee section.
- CorXec retains a copy of the completed Form SS-4 in its files.
- The taxpayer reads and signs a statement indicating the understanding that he or she has authorized the third party to apply for and receive the EIN.
- The third-party retains a copy of the signed statement in its files.
Here’s What Information is Needed to Obtain a Federal Tax ID Number
On your application for a Federal Tax ID Number, some of the information you’ll need to provide includes:
- The legal name of the business entity or the individual for whom the EIN is being requested (and the trade name of the business if it’s different than that entity)
- The name of the executor, administrator, trustee, or “care of” entity
- Mailing address
- Physical street address
- Name of the responsible party and that person’s SSN or ITIN
- Type of legal entity
- Reason for applying for an EIN
- Date your business was started or acquired
- Closing month of your accounting year
- Maximum number of employees expected within the next year
- The principal activity of your business and main line of products sold, work done, or services provided
- Third-Party Designee (if you want to authorize someone else to receive your EIN and answer questions about your application)
Timing to Get Your New Federal ID Number
By applying online, you can usually get an EIN within 24 hours. If you complete IRS Form SS-4 and fax it to the IRS, you will typically have your EIN in less than one week. For applications sent by mail, expect to wait up to four weeks for your EIN.
Realize that any mistakes in your paperwork could delay the process, so be extra careful to have all of your i’s dotted and t’s crossed!
How CorXec can help
If an EIN application isn’t completed correctly or on time, it could mean you will need to delay hiring employees, applying for business licenses, and taking care of other essential business activities.
By authorizing CorXec to fill out the EIN application and submit it for you, you can avoid those issues. You’ll find that our fees to take care of the paperwork are minimal and well worth the peace of mind that your business has what it needs to move forward.
Contact our team at CorXec today for help in obtaining your Federal Tax ID Number.
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- Fast Reliable & Hassle-Free Experience
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