Employer Identification Number (EIN)
The IRS uses an EIN to identify taxpayers for many reasons: Do you have, or will have, employees? Is your business a corp or LLC?And more...Read more below, but if you're ready, click on "Order Now" and we'll get started with your paperwork.
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- What is an EIN?
- When is an EIN required?
- Do you need an EIN?
- What happens if a business entity does not obtain an EIN?
Q: What is an EIN?
A: An EIN is a federal tax id number issued by the IRS to identify a business entity (similar to a social security number being issued to identify an individual, except that an employer identification numberf is used to identify a business entity instead of a person).
Q: What is an EIN?
A: An EIN is usually necessary when an applicant:
- Starts a New Business
- Hires (or Will Hire) Employees
- Is an LLC or Corporation
- Opens a Bank Account
- Changes Type of Organization
- Purchases an Ongoing Business
- Creates a Trust or Pension Plan
- Is a Withholding Agent for Taxes
A: If the answer to any of the following questions is "YES" then you should obtain an EIN:
- Do you have employees?
- Do you operate your business as a corporation or a partnership?
- Do you file any of these tax returns: Employment; Excise; or Alcohol, Tobacco and Firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following types of organizations?
- Trusts
- Estates
- Real estate mortgage investment conduits
- Non-profit organizations
- Farmers' cooperatives
- Plan administrators
Q: What happens if a business entity does not obtain an EIN?
A: Legally, you are required to identify your business with one of two numbers: either your Social Security Number or an EIN (Employer Identification Number, a.k.a. Federal Tax ID Number). If you are a sole proprietor, your Social Security Number can be used on all of your government forms and other official documents, but most small business advisors recommend that you apply for an employer identification number and use the EIN number instead. If you are a corporation, LLC, or other state-level entity, you must obtain an EIN because your business is an entirely separate legal entity. Furthermore, banks require an EIN in order to open a business bank account.
