Employer identification number what is

An EIN is a nine-digit number that helps identify and track employer tax accounts when you incorporate or form an LLC for your business. Each ID is unique and does not expire. You may also use an EIN to identify your small business when filling out payroll reports, opening a corporate bank account, and paying federal taxes.

Besides incorporation, there are several additional benefits that come with obtaining an EIN. Here are a few other areas where business owners may use this tax ID. One of the most popular reasons to obtain an EIN is when a small business plans to hire, and pay, employees.

Prior to making any job offers, obtain an EIN. This will allow the IRS to track your business and ensure the business stays in compliance with tax laws. Most banks require a certified copy of an EIN before opening this account. Remember to bring along a copy of your certificate to the bank. EINs are commonly used by employers for the purpose of reporting taxes.

Employer identification numbers are issued to identify business entities in the United States the same way Social Security Numbers SSNs are used to identify individual residents of the country. When it is used to identify a corporation for tax purposes, it is commonly referred to as a Tax Identification Number TIN. EINs are issued by the IRS and include information about the state in which the corporation is registered.

The agency uses EINs to identify taxpayers that are required to file various business tax returns. You need an EIN if you have employees, operate as corporations or partnerships, file certain tax returns, or withhold taxes from income other than wages.

Business entities must apply for an EIN by phone, online, fax, or mail before they can begin operations. All forms of businesses can apply for and be issued EINs, including:. The IRS is not biased towards the size of the company. This means even those with only one employee are just as eligible for an EIN as multinational corporations.

The EIN is not considered to be sensitive information the same way a Social Security number is and is freely distributed by businesses online and in print publications. Businesses that change their ownership structure usually must apply for a new EIN. For example, sole proprietors who plan to incorporate their businesses must apply for a new EIN.

For corporations , partnerships, trusts, and estates , this number is an EIN. Applying for an EIN costs nothing. Applications can be made by phone for those who aren't in the United States but will do business in the country , fax, mail, or online. The process is fairly easy and uncomplicated. Some of the information that must be included on the form includes:. A business must be located in the U.

Once the online information is validated, an EIN is assigned immediately. The person responsible for the business, regardless of their title within the company, must be an individual and not an entity. EINs are unique to the businesses to which they are assigned.

Apply for an EIN Online. Check out our Interview-style online EIN application. No need to file a Form SS-4! We ask you the questions and you give us the answers. After all validations are done you will get your EIN immediately upon completion. Unless the applicant is a government entity, the responsible party must be an individual, not an entity.

Owners of sole proprietorships are not required to file for an EIN, and can choose to use their Social Security number for the business. An EIN can also be obtained via mail, phone, or fax. The EIN enables the U. EINs are free, after you apply for one. Generally speaking, business entities cannot open bank accounts without an EIN. Further, employers need an EIN to file taxes and pay employees. Therefore, it is crucial that a new business owner apply for an EIN in a timely fashion.

Subhash will not be able to open a business account if he neglected to apply for an EIN. Subhash also needs his EIN to file his tax returns at year end. Should his store become busy and require Subhash to hire workers, he will also require an EIN to pay his staff. It is sometimes necessary to apply for a new EIN. Companies that change ownership structure must apply for new EINs, as do companies that merge with other businesses. Say Subhash requires an influx of cash and decides to partner with an investor.