The Tax Moves Blog

The Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit code assigned by the IRS to businesses and other entities operating in the United States. It functions similarly to a Social Security number for individuals but is used exclusively for business and tax purposes. The format of an EIN is XX-XXXXXXX.

Getting an EIN is necessary if you have employees, operate a corporation or partnership, or need to file certain types of taxes, such as payroll or sales and use taxes. In addition to meeting tax obligations, having an EIN allows you to open business bank accounts, apply for business credit, and establish business relationships with suppliers and customers.

Getting an EIN is necessary for several reasons, including:

Tax Reporting: The EIN is used to identify your business for all tax-related purposes. This includes filing federal and state tax returns, reporting payroll taxes, and handling other tax obligations.

Hiring Employees: If you plan to hire employees, you will need an EIN to report wages and employment taxes to the IRS.

Opening Business Bank Accounts: Most banks require an EIN to open a business bank account. This separates your personal finances from your business finances, which is crucial for accurate accounting and tax reporting.

Applying for Business Licenses and Permits: Many local and state governments require businesses to have an EIN when applying for licenses and permits.

Establishing Business Credit: An EIN is often needed to apply for business credit. This can help you build a credit profile for your business, separate from your personal credit.

Corporate Structuring: If your business is structured as a corporation or partnership, an EIN is mandatory. Sole proprietors can also benefit from having an EIN to maintain separation between personal and business identities.

The process for obtaining an EIN is relatively simple and free. You can complete IRS Form SS-4 in several ways: online through the IRS website, by phone, by fax, or by mail. 

Steps to Obtain an EIN

Determine Your Eligibility

Location: You must have a principal business located in the United States or U.S. Territories.

Responsible Party: The individual applying must have a valid Taxpayer Identification Number (SSN, ITIN, or EIN).

Prepare the Necessary Information

Legal Name of the Entity: The name of the business as it is legally registered.

Type of Entity: Whether it’s a sole proprietorship, partnership, corporation, LLC, estate, trust, etc.

Reason for Applying: Starting a new business, hiring employees, creating a trust or estate, etc.

Responsible Party Information: Name, SSN, ITIN, or EIN of the principal officer, general partner, grantor, owner, or trustor.

Choose Your Method of Application

Online: The fastest and most convenient method.

By Fax: Useful if you prefer not to apply online and need a quicker response than mail.

By Mail: Suitable for those who prefer traditional methods, though it takes the longest.

By Phone: Available for international applicants.

The online application process is straightforward and can be completed in a few steps:

1. Visit the IRS Website
   • Navigate to the IRS EIN application page.
2. Start Application
   • Click “Apply Online Now” and follow the prompts.
   • The application session expires after 15 minutes of inactivity, so have all information ready.
3. Provide Information
   • Enter the legal name, structure, and type of business.
   • Input the responsible party’s details.
   • Provide reasons for applying.
4. Submit Application
   • Review your information for accuracy.
   • Submit the application.
   • You will receive your EIN immediately upon completion.

Pros: Instant EIN issuance, available 24/7. Cons: Only available to businesses with a principal office located in the U.S. or U.S. Territories.

If you choose to apply by fax:

1. Complete Form SS-4
   • Download and fill out the SS-4 form from the IRS website.
2. Fax the Form
   • Fax the completed form to the appropriate IRS fax number. Fax numbers are listed on the IRS website.
3. Receive Your EIN
   • If you include your fax number, the IRS will fax back your EIN within four business days.

Pros: Faster than mail, suitable for those without reliable internet access. Cons: Requires access to a fax machine, longer wait than online.

For those preferring traditional mail:

1. Complete Form SS-4
   • Download and fill out the SS-4 form from the IRS website.
2. Mail the Form
   • Send the completed form to the appropriate IRS address. Addresses are listed on the IRS website.
3. Wait for Response
   • You will receive your EIN by mail within four weeks.

Pros: Accessible for all applicants. Cons: Longest processing time, potential for lost mail.

If you already have an EIN but can’t remember it, you can look for it in previous tax documents, such as tax returns or payroll forms. You can also:

Check Your EIN Confirmation Letter: When you received your EIN, the IRS sent you a confirmation letter. This letter contains your EIN and other important information.

Look at Past Tax Returns: Your EIN will be on any tax returns you have filed for your business.

Contact the IRS: You can call the IRS Business & Specialty Tax Line to request your EIN. Be prepared to provide identifying information to verify your identity.

Once you obtain your Employer Identification Number, be sure to keep accurate and up-to-date records of your business transactions. This will help you meet your tax obligations and avoid problems with the IRS in the future.

Keep Accurate Records: Maintain accurate and up-to-date records of your business transactions. This will help you meet your tax obligations and avoid problems with the IRS.

Use Your EIN Consistently: Use your EIN on all tax-related documents and communications with the IRS.

Inform Relevant Parties: Provide your EIN to banks, lenders, and other entities that require it for business purposes.