An Employer Identification Number (EIN) also referred to as a Federal Employer Identification Number or Federal Identification Number is an identification number that is issued to business bodies to enable the Internal Revenue Service (IRS) to identify them. This number is commonly used by employers for the purpose of reporting taxes.
How Does Employer Identification Number Work?
As earlier stated, the EIN is used to identify the individual residents of the United States and is issued to identify the business entities in the country. The EIN includes information about which state in which the corporation is registered.
The IRS uses the EIN to identify taxpayers who are required to file various tax returns.
Thus for any business body that wants to operate in the U.S., it must apply for an EIN via phone, online, fax, or via email. Note that, all forms of businesses can apply for and get issued with an EIN. These businesses include limited liability companies (LLCs), sole proprietorships, non-profit organizations, government agencies, S corporations, partnerships, estates, and trusts, and many more. A company of any size can acquire the EIN regardless of the number of employees.
How to Apply for Employer Identification Number
Businesses who need an EIN can apply for it in various ways. But note that with the phone and online options, you will get one immediately.
To apply for an EIN via phone, simply call the IRS Business and Specialty tax line at 800-829-4933.
The online application can be done via the IRS EIN Assistant process. Note that you have to complete the application in one session. This is because you can’t save the form and come back to it later. Thus is might be best if you print out the form and answer the questions before you start.
To apply through fax, simply fax your completed – and signed – SS -4 form to the IRS.
Understand that the IRS has limited Form SS-4 submission to one per since 2012, and this rule covers all submissions, whether they are made online, by fax, or by U.S. mail.
Is Employer Identification Number that Important?
For businesses that have employees or those that file certain kinds of taxes, they certainly need an EIN. Also, businesses that are taxed as a corporation or a partnership will need one.
If you file tax returns for employment taxes, excise taxes, and alcohol, tobacco, and firearms, you will need an Employer Identification Number.
In case you withhold taxes on income (not wages) paid to a non-resident alien you will also need an EIN.
If you have a Keogh plan (a retirement plan for self-employed people you will also need an Employer Identification Number.
You may also need an EIN if you are starting your business and apply for a business checking account.
You will need it also if you are applying for a business license.
Who is a Responsible Party?
If you are applying for an EIN, then the responsible party is the person or entity that is in charge of the business. On the EIN application, the responsible party will have to key in their name and a taxpayer ID number like their social security number (SSN) Individual Taxpayer Identification Number (ITIN), or Employer Identification Number (EIN).
How to Verify Your EIN
Simply verify your EIN by calling the IRS’ Business and Specialty Tax Line, Monday through Friday from 7 a.m. to 7 p.m. local time, with the number (800) 829-4933. Understand that for security reasons, the IRS only shares your business’s EIN with an authorized person like the sole proprietor, corporate officer, a partner in a partnership, or other similar roles.
How to Look Up Your EIN
If you happen to lose your Employer Identification Number or forget it, there are several ways you can use it to track it.
If you used your EIN in opening a bank account, you can contact your bank to retrieve it.
If you had filed a tax return for your business, you can find your EIN by looking up your tax return.
You can also call the IRS’ Business and Specialty Tax Line at 800-829-4933 to look up your EIN.