How to Apply for Your IRS EIN
The IRS identifies businesses by their Federal Employer Identification Number, EIN, or FEIN. It's also known as a Federal Tax Identification Number and the majority of businesses need one. Even sole-proprietors, who can file their taxes using their personal Social Security numbers, still usually apply for an EIN to protect the security of their Social Security numbers. You can apply for this EIN in many different ways, some of which are easier than others.
When you run a business, you have to report your earnings to the IRS, and in most cases, you also have to fill out returns related to payroll, sales, and use tax. You can't simply put your business name on these returns. Instead, you need a special number- a Tax Identification Number helps to identify your business to the IRS. Wondering how to apply for a tax ID number? Have questions about how to use these numbers? Then keep reading for an overview of the essentials.
Steps to Obtain your Tax ID (EIN) Number:
- Apply for a Tax ID (EIN) Number Online
- Apply for a Tax ID (EIN) Number by Phone, Mail or Fax
- How to Apply for a Tax ID Number
- How Do You Get a TIN Number?
- How Much Does It Cost to Get a Tax ID Number?
- Do I Need a Tax ID Number?
This is arguably the easiest method on the list. Applying for your IRS EIN online through IRS.com EIN partners, for example, can take just a few minutes and could get your number to you immediately. The online application process is available for all businesses that operate within the United States. If this applies to you, file away!
This site even provides an 'interview style' and simplified version of the EIN application. Instead of filling out confusing forms about your business, the interview style form lets you answer simple questions. The completed online EIN application is then processed and your Tax ID (EIN) Number issued.
If you need the EIN soon, then this method is not recommended. Grab a copy of the SS-4 tax form to apply for your EIN via the traditional mail method. Make sure to fill it out completely and that your return address is correct. The IRS will determine if you need a new EIN and send it to you - although, be advised this method may take up to 4-6 weeks to obtain your IRS EIN Number. Applying for your EIN online is much easier and will save a considerable amount of time.
You can apply for a tax ID number through the mail, over fax or online. However, the government issues a few different types of numbers, and before applying, you need to determine which type of tax ID number you need. Here are some of the most common examples with brief descriptions:
- Social Security Number (SSN) - Issued by the Social Security Administration (SSA), these numbers are typically given to American citizens upon birth or adoption. When you immigrate to the country, you also receive an SSN when the U.S. Citizenship and Immigration Services (USCIS) approves your application. When you get a job, you use your SSN to pay income tax, you note this number on your personal income tax return, and you use this number to identify yourself to the SSA as you make contributions to the retirement and survivors fund.
- Individual Taxpayer Identification Number (ITIN) - Only certain nonresidents and resident aliens along with their spouses and dependents use this number. The ITIN works like an SSN in terms of identifying taxpayers to the government, but it does not facilitate any connection between the taxpayer and the SSA.
- Preparer Taxpayer Identification Number (PTIN) - Paid tax preparers must put this tax ID number on returns they prepare for their clients. If you run an accounting or tax prep firm, you need to obtain this special tax ID number.
- Employer Identification Number (EIN) - Perhaps the most important tax ID number for businesses, the EIN is also used by estates and trusts.
Once you determine which number you need, you are probably wondering, "How do you get a TIN number?" (commonly referred to as your Tax ID Number). To make the process easy, you can contact a professional to help you through the application process. The application requirements vary slightly depending on which TIN you need, and a professional can ensure that you provide the correct information to the government so that your application is processed as quickly as possible.
For example, if you are applying for the EIN, you need a valid taxpayer identification number such as an SSN or an ITIN. You also need your business's legal name, the trade name of your business if it's different than the legal name, and the name of the head executor, trustee or principal of the business. Then, of course, you need the mailing address and the type of business structure (partnership, corporation, church organization, nonprofit, estate, etc.). If the business is incorporated, you need to know the state or country in which it was incorporated, and you need to note why you are applying for the tax ID number. Beyond that, these are a few more details related to the nature of your business, and you have to take some steps to verify your identity to the government.
Once you submit all the information, the government issues you the tax ID number you need. At that point, you can use your number for a variety of tasks. Without the right tax ID number, your business won't be able to do a number of things, from paying taxes to hiring employees. In other words, a tax ID number is essential.
A lot of people ask, "How much does it cost to get a tax ID number?" The cost of a tax ID number varies depending on which number you need and how quickly you need it. If you need to expedite the process so that you receive your number as soon as possible, you should expect to pay a slightly higher fee. However, also keep in mind that in business, time is money. If you have to wait weeks or months to get your number, that can prevent you from moving forward with your business. To protect your financial and entrepreneurial interests, you should work with someone who can help you get your number as fast and with as few hassles as possible.
As indicated above, individuals need tax ID numbers to file their taxes and identify themselves to their employers, but they may also use these numbers on bank account applications and in a variety of other pursuits. Businesses, however, need tax ID numbers for a long list of tasks.
The answer to the question "Do I need a tax ID number?" is absolutely yes if you plan to do any of the following:
- Open business bank accounts - Most banks and credit card companies require a business tax ID if you want to open an account for your business.
- Apply for loans - Similarly, you also need an EIN to apply for most business loans.
- File tax returns including business income tax returns, corporate income tax returns, sales tax returns, use and excise returns, payroll taxes, etc.
- Hire employees - When you hire employees, they have to fill out W-4 forms so that you know how much tax to withhold from their paychecks. Then, at the end of the year, you need to remit W-2 forms to the IRS declaring how much they earned and what was withheld. You need to put your EIN on these forms.
- Apply for local permits and licenses - You can even use these numbers on your applications for permits and licenses. While business names are not always unique, tax ID numbers are always a distinct and reliable way to identify your business to other entities.