An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. EINs are also referred to as Federal Tax Identification Numbers. An EIN is required for most types of business entities, including corporations, partnerships, LLCs, and sole proprietors who have employees. It is also required for certain non-profit organizations, trusts, and estates.
An EIN can be obtained by completing an application with the IRS either online, by mail, fax, or by telephone. The application process is free of charge. Once an EIN is assigned, it becomes the permanent legal identifier for that business entity and is used for all tax-related transactions with the IRS.
Importance of EIN for Business
EIN is also referred to as a Federal Tax Identification Number (FTIN) or Tax Identification Number (TIN). The importance of an EIN is as follows:
- Taxation: All businesses in the United States are required to pay federal taxes. An EIN is necessary to identify the business for tax purposes and to file tax returns.
- Hiring employees: If a business plans to hire employees, it needs an EIN to report taxes withheld from employee paychecks and to pay employer taxes.
- Business banking: Banks typically require businesses to have an EIN to open a business bank account.
- Legal structure: An EIN is necessary to establish a legal business structure, such as a corporation or partnership.
- Business licenses: Many states and local governments require businesses to have an EIN to obtain a business license or permit.
Overall, an EIN is crucial for identifying a business for tax purposes and establishing its legal and financial identity.
How to Get an Employer Identification Number?
An Employer Identification Number (EIN) is a unique identification number assigned to businesses by the Internal Revenue Service (IRS) in the United States. Here are some steps to get an EIN:
- Determine your eligibility: You can apply for an EIN if you have a business located in the United States, or if you are a non-resident alien who needs to file a tax return in the USA.
- Decide on the method of application: There are three ways to apply for an EIN: online, by mail, or by fax.
- Apply for an EIN: To apply online, the applicant must have a valid SSN/ITIN. Application can be submitted by login to the IRS website and complete the online application. In case of non-US residents/foreign founders, EIN has to be applied either through fax or mail. To apply by mail or fax, download Form SS-4 from the IRS website, complete it and send it to the appropriate address or fax number listed on the form. Fax method is preferred and recommended for this being faster than applying through mail.
- Provide required information: You will need to provide information about your business, such as its legal name, the name and Social Security number or Individual Taxpayer Identification Number of the responsible party, the type of entity, and the reason for applying for an EIN.
- Wait for confirmation: Once the IRS processes your application, you will receive a confirmation letter with your EIN.
It’s important to note that there is no cost to apply for an EIN. If you have any questions or concerns about the process, you can contact the IRS directly. However, if needed, you can approach agencies like Koshika for help as we have professionals who are in this profession from long period of time. With Koshika, you can be rest assured that your application for EIN is done with 100% accuracy and it is processed faster. We generally deliver the EIN within 7-10 days while direct applications (without continuous follow up with the IRS) may take upto 45-60 days.