Employer Identification Number

An employer identification number (EIN) is a unique 9 digit number that is assigned to a business entity. Employer identification number is an important tax identifier for your business. Nearly all businesses require one, and it functions in the same way that a Social Security number does for individuals. This article explains what an EIN number is and how to get one.

What is an Employer Identification Number (EIN) ?

Employer identification number (EIN) is the name of a unique number that is given to a business so that the Internal Revenue Service (IRS) can quickly identify it. Employer identification numbers are commonly used by employers for the purpose of reporting taxes.

The IRS assigns companies and other entities an Employer ID Number (EIN) to identify them. Even firms without employees typically need an EIN. Direct applications for EINs from businesses are accepted by the IRS, which typically issues them immediately. The number is formatted as XX-XXXXXXX and has nine digits.

While identifying your company for federal income tax purposes is the primary function of an EIN, it is also required when applying for business bank accounts, loans, or credit cards as well as state and local taxes, licenses, and other registrations.

Kay Facts of US Employer Identification Number

  • EIN are given to businesses by the IRS, typically when they are newly established.
  • The Internal Revenue Service issues an EIN to identify a business for taxation purposes.
  • Before they may start doing business, all companies that meet specific requirements need to get an EIN.
  • EIN applications are available on the IRS website and can be submitted for free.
  • Along with tax reporting, EINs enable businesses to open bank accounts, pay employees, apply for credit, and more.
  • Even after a business is dissolved, EINs never expire.
  • If your company undergoes a change in ownership structure, a merger, the creation of a retirement plan, or bankruptcy, among other business events, you must apply for a new EIN.
  • An EIN application can be submitted by mail, fax, phone, or even online.

How Employer Identification Number Works ?

In the same manner that Social Security Numbers (SSNs) are used to identify specific inhabitants of the country, Employer Identification Numbers are provided to identify corporate entities in the United States. The Federal Tax Identification Number is another name for the EIN.

EINs are individual nine-digit numbers that are formatted as XX-XXXXXXX, as was mentioned before. The IRS issues EINs, which provide details about the state where a corporation is registered. EINs are used by the organization to identify taxpayers who must submit different business tax filings.

If you employ people, conduct business as a company or partnership, file certain tax returns, or withhold taxes from income other than wages, you must obtain an EIN. Before starting operations, business organizations must submit a phone, online, fax, or postal application for an EIN. EINs are available to all kinds of businesses, including :
  • Estates
  • Trusts
  • S corporations
  • Partnerships
  • Limited liability companies (LLCs)
  • Non-profit organizations (NPOs)
  • Sole proprietorships
  • Government agencies

The size of the business has no bearing on how the IRS treats it. This means that everyone, including those with only one employee, is qualified to apply for an EIN.

Note :
Sole proprietorships are exempt from applying for an EIN and are free to use their Social Security number instead.

Who is Eligible to Get Employer Identification Number ?

Determine your eligibility for EIN :
  • If your principal business is located in the US or U.S. Territories, you can apply for an EIN online.
  • A valid Taxpayer Identification Number is required for those submitting applications online (SSN, ITIN, EIN).
  • You are limited to one Employer Identification Number per responsible party per day.

The person who ultimately owns, controls, or exerts ultimate effective control over the entity is the "responsible party". The responsible party must be an individual (natural person), not an entity, unless the applicant is a government agency.

When Business Needs an EIN ?

As part of their reporting requirements, the IRS mandates that certain businesses obtain an EIN. Your business will need an EIN when :
  • You have employees.
  • You are starting a state-registered business, such as a partnership, LLC, or corporation.
  • Your business must pay excise taxes, or you are subject to tobacco, alcohol, or firearms regulations.
  • You withhold taxes from income paid to a non-resident alien, excluding wages.
  • You use a tax-deferred pension plan or the Keogh Plan.
  • Your company works with specific institutions, such as nonprofits, trusts, estates, and agricultural cooperatives.

Benefits of Employer Identification Number

The businesses to which EINs are granted have a distinct identity. Even if the first employer goes out of business, the numbers never expire and the identical set is never assigned to another company. You may keep your personal and corporate finances separate by obtaining an EIN. This enables you to safeguard your private data and keep it safe from identity theft.

Subcontractors and other self-employed people are normally required to have an EIN, which the primary contractor will use to report to the IRS any business revenue received from the subcontractor.

The ability to operate is the key benefit of obtaining an EIN. Without it, your company cannot function. Before you can begin, you must apply for an employer identification number. To do the following, you also need an EIN:
  • Hiring and compensating workers.
  • Maintaining corporate shields.
  • Acquiring credit, opening bank accounts, and investing surplus cash.
  • Registering for state taxes and submitting business taxes.

How to Get an Employer Identification Number ?

Applying for an EIN online through the IRS website is the fastest way to do it. The application for an EIN is free of charge. You can also get an EIN via phone, fax, or mail. Go to the IRS website and print the Form SS-4 before you apply for your Employer ID number, then complete the application form and use it to apply.

The name of the company's chief officer, partner, owner, trustor, or any other title, together with their individual taxpayer identification number, must be listed on the application in order for the IRS to issue an EIN. The application procedure will go more smoothly if all the necessary information is provided.

You can apply for an Employer Identification Number (EIN) in one of four ways :

1) Online :

By using the IRS EIN Assistant method, you can submit an online EIN application. You cannot save and come back to your online EIN application later, so you must finish it in one session. After 15 minutes of inactivity, your session will expire for security reasons, and you will have to restart.

Businesses in the United States or its territories can use the online method. Before applying online, you must have a current taxpayer identification number. After you submit the form, the data is verified, and you can get your Employer Identification Number immediately.

2) Phone :

You cannot apply for your EIN over the phone, if you live in the United States. Call 267-941-1099 from 6:00 a.m. to 11:00 p.m. (Eastern Time), Monday through Friday, to submit an application, if you reside outside of the United States. It should be noted that this number is not toll-free.

Only international applicants have the option of applying for an EIN over the phone. Business owners that are eligible for an EIN but do not have a legal domicile, main place of business, major office, or principal agency in the United States are considered international applicants. Any inquiries regarding the application form SS-4 should be answered by the caller, who must be qualified to get the EIN.

3) Fax :

Send the SS-4 application form via fax to the state fax number. You will receive your EIN by fax within four business days if you provide your fax number.

4) Mail :

Mail your completed SS-4 Form to the relevant IRS office. Within four to five weeks, you will receive your EIN in the mail.

Note :
You don't have to wait days or weeks to get an EIN, if you feel comfortable applying online or over the phone.

Closing Your Employee Identification Number

Once you receive an EIN, you and your business will always be linked by that identifying number. The IRS is not legally permitted to ever cancel an EIN since it becomes inextricably linked to that entity. A crucial component of the necessary financial reporting is an EIN. The EIN is still connected to an entity even if it never files a return. The entity may utilize the identifying number at a later time if necessary once an EIN has been issued.

The IRS has the right to terminate your related business account if you are issued an identification number but then realize you never needed it. For startup businesses that never truly launch, this is frequently the case. The legal name, business address, EIN number, and the explanation for the account closure must all be included in a physical letter that is mailed. Only the IRS business account will be suspended; the EIN will be kept.

IRS Help to Look Up EIN

Call the Business and Specialty Tax Line at 800-829-4933 and ask the IRS to search for your EIN. On Monday through Friday, this department is open from 7 a.m. to 7 p.m. local time.

Frequently Asked Questions (FAQs)

What is the purpose of Employer Identification Number in USA?
Employer identification numbers are only issued for tax administration purposes and should not be used for participation in any other activities. (e.g., tax lien auction, lotteries or sales etc.)

How do I find my US EIN number?
Checking on the status of an application truly applies to mail applications, which may take a few weeks, since online applicants get EINs right away. You can contact 800-829-4933 to find out the status of the EIN application you mailed in.

When I need a new EIN?
A new EIN may be necessary if you alter your legal business structure, such as from a corporation to another organization or from a sole proprietorship to a corporation. Simple adjustments to your business typically don't require a new EIN.

Do I Need an EIN for My Business?
Every business entity, whether it has workers, operates as a corporation or partnership, files specific tax returns, or withholds income taxes on income other than salaries, needs an employer identification number.

Does EIN number require SSN?
An SSN (Social Security Number) is not required to obtain an EIN. By mailing or faxing Form SS-4 to the IRS, you can obtain an EIN without an SSN.

How can I get my EIN number fast?
You can apply online and receive an EIN right away. To apply internationally, dial 267-941-1099. If you'd rather, you can fax a finished Form SS-4 to the state service center, and they'll get back to you with a return fax in approximately a week.

How long will it take to get EIN number?
You can obtain an EIN right away when submitting an online application. The IRS can receive an EIN application by fax, but it could take up to two weeks. The IRS also accepts applications sent via paper mail, but it estimates a return time of four to five weeks.

What happens, if I Lose or misplace my EIN?
If you lose your EIN, check for it on the notification the IRS gave to you when it issued your EIN. By contacting the financial institution where you conduct your regular banking, you can also try to recover it. Additionally, you can discover it on previous tax returns. Contact the IRS if everything else fails.

How to find Employer Identification number without W2?
Your EIN can be found on several documents, including past tax returns, business loan applications, confirmation letters from the IRS, business credit reports, and payroll records. To find your federal tax ID number, you can also contact the IRS by phone. Asking the firm is a good place to start if you need to find out another company's EIN.

Is my EIN the same as my SSN?
Your SSN is not connected to or associated with an EIN. As a result, by utilizing a different number than your SSN for reporting purposes, it offers additional security for personal privacy. The IRS has an easy online application process for getting an EIN. Getting an EIN has benefits other than just maintaining your privacy.

Do EIN numbers expire?
EINs are permanent. Even in the event of a business's liquidation, the IRS will not cancel an EIN because they have no expiration date. The IRS will never provide an organization with an EIN that has already been used. All EINs are kept on file in case the IRS has to consult them in the future.