August 4, 2021
How To Get An Employer Identification Number
As a business owner, you’ll likely need to apply for an Employer Identification Number or EIN at some point. You’ll need to use it when opening company bank accounts, applying for business loans, or filing business related tax forms.
What is an EIN
A FEIN, Federal Employer Identification Number, Employer Identification Number, or EIN is like a Social Security Number (SSN) for your business. It’s a unique nine-digit number provided by the Internal Revenue Service (IRS) to identify a business entity.
How to know if you need an EIN
Some businesses are required to have an EIN, while for others, it’s optional. Your business is required to have an EIN if:
- You have employees
- You operate your business as a corporation or partnership
- You file specific tax returns for:
3. Alcohol, Tobacco and Firearms
- You withhold taxes on income other than wages, paid to non-U.S. citizens or residents of other countries
- You have a KEOGH Plan
- You are involved with any of the following types of businesses:
1. Trusts, IRAs, Exempt Organizations
3. Real Estate Mortgage Investment Conduits
4. Non-profit Organizations
5. Farmers’ Cooperatives
6. Plan Administrators
If you do not meet one of these circumstances, you can still apply for an EIN. We recommend applying for an EIN when you first open your business, but it’s never too late. Having one eliminates the need to provide your personal SSN as an identifying number for your company. This adds a layer of privacy and legitimizes your business.
How to apply for an EIN
Applying for an EIN is a free and simple service provided by the IRS. Submission of the Form SS-4, Application for Employer Identification Number, can be online via the IRS website. Validation of information occurs during the online session, and the EIN is issued immediately. For those who are unable to move at internet speeds, there are options to apply via fax or mail, but turnaround times can range from 1 – 6 weeks.
All EIN applications must provide the legal name and identification number, such as the SSN, ITIN, or EIN of:
- The principal officer
- General partner
This individual is the responsible party and must have the power to control, direct, and manage the business for the assigned EIN. Report any changes in the responsible party to the IRS within 60 days using Form 8822-B, Change of Address or Responsible Party-Business.
When you’ll need your EIN
There are many circumstances where you will need your EIN, including when:
- Opening a company bank account
- Applying for a company credit card
- Establishing a SOLO 401(k)
- Filing quarterly payroll reports such as the Form 941
- Making payroll tax liability payments, such as through EFTPS
- Issuing W-2’s to employees
- Identifying your business on federal business tax returns (Form 1065, 1120-S, etc.)
Changing an EIN
If you already have an EIN, there three main cases in which you need to apply for a replacement EIN:
- Change in ownership (example: the creation of a corporation after a statutory merger)
- Change in business structure (example: a partnership that decides to incorporate)
- Change in ownership & business structure (example: a California sole proprietorship that adds a partner, becoming a partnership)
Other EIN facts
Many states will issue a tax identification number specific to your business. It is important not to confuse this state TIN with your federal EIN. The state TIN is generally used for your state tax account, such as when filing and paying sales taxes, remitting employer payroll withholdings, or paying state corporate income taxes. There may be times where you need both the state and federal identification numbers, such as on W-2 forms. These numbers are not interchangeable and, while their purpose is similar, correct usage depends on the circumstance.
Not a Formations Customer Yet?
We are here to help if you have questions or need assistance applying for your EIN as part of your S-Corp transition.