Are you thinking about starting your own business? If yes, then you need to apply for an EIN (Employment Identification Number).
Whether you’re learning how to start a blog, selling products on Shopify, or thinking about opening your own restaurant, every business operating in the US must register an EIN.
An Employer ID Number (EIN) is essential for all businesses because it will help your business identify for taxes, especially for federal income taxes.
The EIN is a nine-digit number allotted by the IRS, and the IRS uses it to identify taxpayers who need to file numerous business tax returns.
Additionally, you may also require an EIN while applying for:
- Business bank accounts
- Credit cards
- State and local taxes
- Other registrations such as sales tax or a local business license
Applying for an EIN doesn’t guarantee that you’ll be approved. There are a few reasons why you may be denied an EIN.
So, in this step-by-step guide, I’ll walk you through the steps you need to take in order to apply for and receive an EIN for your business.
Before that, you should know why you need an EIN.
Why Does Your Business Need an EIN?
Here are various reasons why your business needs an EIN:
- You need it to identify employers’ tax accounts.
- Your startup is registered with a state, like a partnership, LLC, or corporation.
- Needs arise when your business has to pay excise taxes, or you are subject to tobacco, alcohol, or firearms regulations.
- You hold back taxes on income, excluding wages, paid to a non-resident alien.
- You are using a Keough plan or tax-deferred pension plan.
- You are associated with specific organizations like non-profits, trusts, estates, etc.
- Your business wants to apply for Small Business Administration (SBA) loans, such as disaster loans as it is affected by the public health crisis, economic recession, or the 2021 winter storms.
Find Out The Type of Business You Are Running
Is your business type sole proprietorship, partnership, LLC, or others? Before you file for an EIN, you need to know the type of business you have.
To find out:
- Check your business file for a six-digit business code.
- Next, enter it at the top of your annual income tax form.
Entering the correct code is crucial as the IRS educates its agents about the unique operating procedures in diverse industries and specific business types.
It equips the agents to recognize which businesses are under-reporting income and overstating deductions.
Typically, the IRS screens your tax return to determine if your income and expenses are unusual for your business type specified by your business code.
Look for your business code in the complete list of codes included in the IRS instructions for the tax form.
In case the codes you find aren’t apt for your business, you might be operating two or more businesses. In that case, you can report the income and expenses from each business individually.
Nevertheless, if you are operating only one business, go for the code that accounts for the highest percentage of the total business receipts.
How to apply for an EIN?
If your business, office or agency, or legal residence is located in the US or its territories, you can apply for an EIN online or via fax or mail.
1. Applying For an EIN Online
Applying for an EIN online is the most efficient and quickest way to receive a 9-digit EIN for your business.
Provided you fill and submit the interview style application form correctly, you can obtain your EIN instantly.
Consider these essential points before you fill your online EIN form:
- The online EIN application can be filled from Monday till Friday, 7 a.m. to 10 p.m. Eastern Time.
- Prepare yourself before applying for an EIN online as the session time out after 15 minutes of inactivity. Consider filling the Form SS-4 (Application for Employer Identification Number) in advance.
- You must have a valid Taxpayer Identification Number (SSN, ITIN, EIN) before applying for the EIN.
After you obtain your number, you will have to wait for up to two weeks before filing an electronic return, making deposits electronically, or passing an IRS Taxpayer Identification Number (TIN) match program.
Although, in the meantime, you can use your newly acquired EIN to set up bank accounts, filing paper returns, and more.
2. Applying for an EIN via Fax
Alternately, you can fax the form to the right fax number to apply for your EIN. You can send in your EIN applications via fax anytime you want as the services are open 24/7.
People receive their 9-digit Employer ID Number by fax, usually within four business days.
3. Applying for an EIN via Mail
Applying via email is the slowest method to get your EIN and may take up to four weeks. Make sure to mail your SS-4 form (EIN application form) to the right IRS office.
You need to mail the form at least 4 to 5 weeks in advance before you require your EIN to file a return or make a payment. Your EIN will be mailed in approximately 4 weeks.
How to Apply for EIN as an International Applicant?
In case you don’t have a principal place of business, office or agency, or legal residence in the U.S. or its territories, you will be considered an international applicant.
In that case, you can only apply for an EIN via telephone, fax, or mail.
To apply for EIN via telephone, an international applicant can call 267-941-1099 between 6 a.m. to 11 p.m. Eastern time, Monday to Friday. It isn’t a toll-free number. Only an authorized person can receive the EIN.
You will have to answer queries about the Form SS-4, Application for Employer Identification Number.
Therefore, consider completing the Form SS-4 before dialing up the number. An IRS representative will use the information you provide to create your account and allocate you an EIN.
You can follow the same procedure as mentioned above to obtain an EIN via Fax and mail.
How to Identify Fake EIN Application Sites?
There are plenty of fake EIN application sites out there that may appear like the official IRS site at first glance.
Be wary of them!
They may ask you for money to file the form, but keep in mind that the IRS will never charge for filing an EIN application.
Watch out for these signs in an accurate IRS site:
- The URL should be gov and not irs.com.
- You will see the letters IRS and a special symbol with a justice scale on most IRS pages.
- When you look at the print on the bottom of the page, a non-IRS site may claim that they’re not associated with the U.S. Treasury Department or the IRS.
To summarize, having an EIN is crucial if you run your own business. You need it for several reasons, most notably for federal income tax purposes. Follow the tips in this article to obtain your EIN today.