Do I Need an Employer Identification Number (EIN) and How to Get One
A definitive guide about Employer Identification Numbers (EIN). Who’s required to have an EIN? Who doesn’t need an EIN? How do you get one?
an Employer Identification Number (EIN)?
An Employer Identification Number (EIN) is a nine-digit number that looks like a Social Security number. This number is used by the United States Internal Revenue Service (IRS) to identify your business for tax purposes. Another name for an Employer Identification Number is a Federal Tax Identification Number (FTIN).
Further, an EIN is required for companies in order to file taxes as a separate entity. It is required to file taxes as a separate entity as opposed to filing taxes under an individual’s Social Security number (SSN). With an EIN, a business owner does not have to use their Social Security number in order to file taxes for their business. Instead, they use the EIN.
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Who is required to have an EIN?
Depending on your business structure, or if you have employees the IRS might require you to have an EIN. An EIN is required for certain business structures. Therefore, if your business is operated as any of the following structures then you’re required to have an EIN.
- a corporation (if your business ends in ‘, Inc.’)
- an LLC (Limited Liability Company)
- a partnership
It is not required for sole proprietors and DBA’s doing business, a social security number is enough for these.
Other types of organizations where an EIN is required:
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Non-profit organizations
- Farmers’ cooperatives
- Plan adminstrators
Also, an EIN is required if you file any of the following tax returns:
An EIN is also required if you withhold taxes on income (other than wages) paid to a non-resident alien.
In most cases, an EIN is not required if you are a sole proprietor and DBAs (i.e. Doing Business As).
Who does not need an EIN?
Since we have listed all of the times when you need an EIN, it might be important to consider a few cases where there might be some confusion around whether or not you do need an EIN.
If you’re a sole proprietor or single-member LLC, with no employees you likely don’t need an EIN.
What is a sole proprietor?
A sole proprietor is someone who typically works for themselves as an independent contractor, or freelancer, providing professional services directly to clients. For example, independent graphic designers, independent business consultants, personal organizers, etc.
Check out this resource to learn about the advantages of being a sole proprietor: Sole Proprietorship Advantages.
In the event that anyone operating a business as a sole proprietor brings on an employee (not a contractor), they need an Employer Identification Number (EIN). What is the easiest way to tell that you are an employer that needs an EIN? The answer is very simple. You need an EIN if there is anyone that you need to send a W2 or 1099-MISC.
When do you need to get an EIN?
You need your EIN as soon as you incorporate your business as a C Corp, S Corp, LLC (non-single member), or partnership.
Also, you need an EIN if you are a single-member LLC or sole proprietor that plans to have employees. Further, you need to have an EIN if you plan to file any of these tax returns: Employment, excise, tobacco, alcohol, or firearms. Further, you need an EIN if you plan to withhold any taxes on income paid to a non-resident alien, or if you have a Keogh plan.
How do you get an Employee Identification Number (EIN)?
The IRS (Internal Revenue Service) provides a free service for applying for an Employer Identification Number. With that said, beware of any websites on the internet that charge for it. You can use your previously provided EIN if you are a household employer or a sole proprietor or a home-care recipient. Therefore, under these cases, you do not need to apply for a new one. Also, in the
There are four ways that the IRS provides to apply for an EIN:
The form used to apply for an EIN is for SS-4.
This is by far the most popular, convenient, and quickest way to apply for and get an EIN. This is done by completing an internet EIN application provided by the IRS. When applying for an EIN online the information is completed and validated during the online session. This means that the EIN is issued immediately. Therefore, you do not have to wait for your EIN like you have to do for any of the other methods mentioned below. This is one of the key benefits of applying for an EIN online.
This application is available to all entities whose principal business, office, or agency is located in the United States or U.S. Territories. In order to use the online application, the individual applying for the EIN must have a valid Tax Payer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number.
To submit an application for an EIN by fax the taxpayer must first complete the EIN application form, known as Form SS-4. Next, fax the completed form to the appropriate fax number based on your company’s location. Fax your completed Form SS-4 to the fax number closest to your business’s location. All of the fax numbers are located on the following list published by the IRS, Where to File Your Taxes (for Form SS-4).
Please note that when submitting your application by fax include a fax number on the cover sheet where you can receive faxes. This is necessary because after the IRS has reviewed and approved your application your EIN is returned to you by fax at the fax number you provided. Therefore, do not leave a fax number on your cover sheet where you cannot receive a fax. Within four days, after it has been determined that the entity needs a new EIN, the new EIN number is faxed back to the fax number provided by the applicant.
Download a PDF copy of the most up-to-date Form SS-4, here: Form SS-4 (PDF).
The process for applying for an EIN is similar to the process of applying for an EIN by fax. It starts with completing the same application form, Form SS-4, with the required information. After the application form SS-4 is completed, the completed form is mailed to the appropriate address based on the business’s location. For your reference, a list of the addresses can be found on the IRS website at this page: Where to File Your Taxes (for Form SS-4). A new EIN number is issued once everything is reviewed and approved in the application. Then, the new EIN is mailed to the applicant.
It takes four weeks to process an EIN application by mail, so plan to wait. Therefore, we recommend that you apply for an EIN online, or by fax if you are unable to apply online. Also, please be sure to provide an address in your application where you are certain that you will be able to receive mail for at least the next month. Otherwise, your new EIN number might get lost in the mail. This would be a headache not worth dealing with.
Download a PDF copy of the most up-to-date Form SS-4, here: Form SS-4 (PDF).
The last option for applying for an EIN is by phone. This option is for
International applicants need to call 267-941-1099. Please note that this is not a
Calls are taken between 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday.
Further, only a person authorized to receive an EIN and answer the questions found on Form SS-4 should make the call. Complete the Third Party Designee section only if you want to authorize the named individual to receive the entity’s EIN. Also, complete the Third Party Designee section if you want the designee to answer questions about Form SS-4. The designee’s authority terminates after the EIN is assigned. For the authorization to be valid the signature area must be completed.
The Internal Revenue Service also gives other ways by which an individual can apply for an Employee Identification Number which include applying by fax or by mail. You can complete the form available on the website in PDF form. Ensure all the information required is provided. You can also email the
The information provided in this article was taken from the IRS website (IRS.gov). The specific articles used in this post are below.
How to Apply for an EIN
Do I Need an EIN
About Falcon Expenses
Falcon Expenses is a top-rated expense and mileage tracker app for self-employed and small businesses to track expenses and tax deductions. Falcon customers record $6,600, on average, in annual tax deductions. Get started today. The longer you wait, the more tax deductions you miss.
Automatically track mileage expenses and expenses, keep an odometer log, receipt vault and log billable hours. Quickly organize expenses by time period, project, or client. Easily create expense reports and mileage logs with your expense data to email to anyone in PDF or spreadsheet formats, all from your phone. Falcon’s expense report template is IRS compliant. Use for keeping track of tax deductions, reimbursements, taxes, record keeping, and more. Falcon Expenses is great for self-employed, freelancers, realtors, delivery drivers, couriers, business travelers, truckers, and more.
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