Employer Identification Number (EIN) is a unique 9-digit number assigned by Internal Revenue Service (IRS) to a business. EIN (also known as a Tax ID number) is used to identify your business for tax purposes.
IRS allows you to get your EIN online, by phone, fax, or by mail immediately for free. To know more about what is EIN number and how to get EIN for free, read this complete article.
EIN is also known as:
- Federal Tax Identification Number (FTIN)
- Federal Employer Identification Number (FEIN)
- 95 Number
- Tax ID Number
Like your Social Security Number (SSN), which is used to identify USA residents, EIN (Employer ID Numbers) helps identify business entities registered in the USA. However, EIN is not sensitive information like SSN, and you can freely share it on the internet or distribute it through publications.
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Who Needs an Employer ID Number?
As per Internal Revenue Service’s (IRS) established rules, your business must acquire an EIN in the following situations;
- Your business has or plans to hire employees.
- Your business is registered as a corporation or partnership.
- Your business follows a multi-membered LLC structure.
- Your business has a Keogh plan or solo 401(k) retirement plan.
- Your business withholds taxes on income, for nonwage, paid to a nonresident alien.
- Your business files excise, employment, or Alcohol, Tobacco, and Firearms taxes.
- Your Business is based on any of the following organizations;
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Estates
- Farmers’ cooperatives
- Non-profit organizations
- Plan administrators
When Does Sole Proprietorship Need an EIN?
A sole Proprietorship generally does not need an EIN. However, if your company has employees or pays pension plans, excise, or similar taxes mentioned above, your Sole Proprietorship is entitled to have an EIN.
Moreover, a sole proprietorship also needs an EIN if;
- You are subject to a bankruptcy proceeding.
- You wish to open a bank account.
- You incorporate.
- You take in partners and operate as a partnership.
- You purchase or inherit an existing business that you operate as a sole proprietorship.
When Does an LLC Need an EIN?
If you are the sole owner of an LLC, you do not need to acquire an Employer ID Number. However, a multi-membered LLC, a single-membered LLC with employees, or an LLC that chooses to pay its taxes as a corporation; must get an EIN.
Apply for an EIN (A Detailed Guide)
There are many ways you can apply for EIN with ease. But there are some requirements one must meet before filing an EIN application.
What to do Before Applying for EIN?
You should form your LLC before getting an EIN. The IRS will ask for the business formation date and legal name on this application, so you’ll need to register as a company in all states that require it (and get approval from them) beforehand to apply for their nationwide tax ID number.
IRS offers an EIN to all business entities for free. You can apply for your EIN online, via fax, or through the mail by visiting the IRS website. Before you apply for an EIN, you must;
A. Check for Your EIN Eligibility
In order to get an EIN, you should meet the following conditions:
- Your principal business must be located in the U.S. or U.S. territories.
- The person applying (responsible party) must have a valid taxpayer identification number, such as SSN, ITIN, or EIN.
B. Collect Necessary Information
Reviewing IRS Instructions for Form SS-4 for EIN and the PDF version of the EIN application help orient your mind about the basic requirements for the EIN application. Here are a few highlights;
- Name, address, and SSN of the responsible party
- Type of business entity
- The primary reason for applying (e.g., banking purposes, launching a business, hiring employees, etc.)
- The starting date or the day you acquired your business.
- Your primary industry’s description and explanation of its primary product or service.
- Maximum number and type of employees your business expects to hire during the next 12 months.
- The date when you were or will be paid in your business for the 1st time
- Closing month of your company’s fiscal year.
- If you pay your employees $4,000 or less in wages per calendar year, how would you like to file taxes? Whether an annual employer tax return or a quarterly employer tax return.
How to Apply for an EIN for Free (Different Ways)
As a small business owner, you may be responsible for filing your own taxes. That can mean needing an Employer Identification Number (EIN).
An EIN does not cost any money to apply for, but if you don’t have time, you can reach out to any reliable online service to do this. You can apply for EIN online, via Fax, or by Mail. Let us discover them one by one briefly.
Apply for an EIN Online
In order to apply online, you need my Social Security account. If you do not have my Social Security account, you will need to create one. Once you have my Social Security account, go to the business section and click on “Apply for an Employer Identification Number.”
The website will walk you through the steps of filling out the application. You will need to provide your legal business name, business phone number, and other information required to apply for an EIN. The website will also ask you to which address the EIN should be mailed to.
Apply online through the official website of the Internal Revenue Service (IRS).
Apply for an EIN by Fax
In order to apply by fax, you need a Social Security account. Once you have my Social Security account, go to the business section and click on “Apply for an Employer Identification Number.“
The website will walk you through the steps of filling out the application. You will need to provide your legal business name, business phone number, and other information required to apply for an EIN. The website will also ask you to which address the EIN should be mailed to.
If you are submitting your EIN application by fax, send it to the fax number (855) 641-6935.
Apply for an EIN (Tax ID Number) by Mail
If applying for EIN by mail, submit your application to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999.
In order to apply by mail, you will need to complete the SS-4 form which is available for download on this website. The application can be mailed in or faxed in, but the application must be signed and notarized.
The EIN will be mailed to the address you provide. If you are applying by mail, you will also need to provide your email address so the EIN can be sent electronically.
Once you have submitted your application, it usually takes about four weeks for the EIN to be issued.
You can get your EIN filed immediately by professional LLC formation services at a fraction of the cost and save yourself from any hassle or filling out the wrong paperwork.
Benefits of Having an EIN Number
Even though IRS does not require your business to have an EIN, getting one will benefit you in the following ways;
- You can file business taxes and avoid tax penalties.
- You can open a business bank account.
- Your business will have credibility.
- You will be saved from identity theft.
- EIN speeds up business loan applications.
- EIN establishes business credit.
- EIN builds trust with vendors.
- Your company can easily hire employees.
- Your business gets more options as an alien or non-USA resident
FAQs on Employer ID Number
Aisha Noreen is an owner of a small business with more than 9 years of experience in the marketing industry. With the wisdom of an old soul, she always seeks innovation and mind-blowing ROI techniques. Her unique approach helped many small businesses thrive and she can surprise you in many ways as well. Believe it or not, her energy, passion, and creativity are contagious enough to transform your business and take it to another level.
