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Key takeout
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You can apply for your EIN online or via email
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EIN helps to separate individual and business finances
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If you pay an employee and submit payroll tax, you will need a company EIN
Separating personal and business expenses is important as a business owner, and the employer’s identification number (EIN) is the best way to make that possible. An EIN number helps keep your Social Security Number (SSN) safe and secure. Plus, it makes it look more legitimate to potential clients and customers. Knowing how to get an EIN, why you should get it, and where to apply for an EIN will help you determine whether it is the right step in your business.
What is EIN?
EIN is the state and federal tax ID number of your business. The IRS assigns an EIN specific to your business so that your Social Security number is unique to you. Rather than being formatted as in personal SSN 123-45-6789, the EIN number conforms to the following format: 12-3456789.
Why do small businesses need to obtain an EIN?
There are several reasons why small businesses should get an EIN. Suppose your business is configured as a sole owner with no employees. In that case, you can choose to use a tax SSN or EIN, but it is better to use an EIN. Using EIN numbers separates business and personal finances, protects SSNs, and reduces the chances of identity theft.
Regardless of the business structure, if there are employees who pay and submit payroll taxes, an EIN is required. Other organizational structures also require EINs such as:
- Has a pension system with a repeat tax system like the Keogh Plan
- real estate
- Farmers Corp
- Excluding trusts, certain IRAs, revocable trusts owned by grantors and exempt organizations business income tax returns
- Companies paying alcohol, excise tax, firearms and cigarette taxes
- Nonprofit organizations
- Real estate mortgage investor
EIN makes it easy to apply for business bank accounts, credit cards and small business loans. It is also useful when applying for business licenses and permits.
How to apply for an EIN
There are several ways to apply for an EIN, such as fax, email, or online. If you wish to apply by fax or email, you must fill out the IRS form SS-4 and submit it.
If you need a fast EIN number, you can apply online. Obtaining an EIN from the IRS is free of charge and will be issued immediately after application. Here’s how to get your EIN number online in three steps:
Step 1: Determine Eligibility
To qualify for an online EIN, the primary business location must be in the United States or one of its territory. Applicants also need a Social Security number or other valid taxpayer number.
Additionally, the applicant must be the person responsible for directing, managing or managing the business and its finances. If anyone other than the person in charge applies, the person in charge must sign the third party nominee portion of SS-4.
Step 2: Gather the information
Please make sure you have the correct information available before applying for an EIN. Your online EIN application must provide:
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Applicable individual legal names
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Business Trade Name
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Mail and street addresses, if they are different
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State of the county and major business locations
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Name of the person responsible and their taxpayer number
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Number of LLC members when applying as a limited liability company (LLC)
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Entity Type
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If the company is a company, then the country or country of establishment
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Reasons for applying (e.g. start a new business, hire an employee, buy a business, banking purposes, creating a trust or pension scheme, etc.)
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Business start or acquisition date
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Fiscal year closing month
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The highest employee number you can expect within the next 13 months
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First date pension or wage paid
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Major business activities
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Whether the applicant has previously applied for or issued an EIN
This information is also available in the PDF version of Form SS-4.
Step 3: Apply for EIN
The final step is to apply for an EIN. After filling out the SS-4, you can apply it by fax or email. Immigrant or overseas applicants can also apply by phone. However, if you apply online, you will need to access the IRS online tool.
Available from 1am to 10pm on EST, our online EIN assistant will guide you through the application step by step. As a security measure, the system will automatically log out after 15 minutes, so be sure to prepare all your information. The person in charge can only apply for one EIN per day.
Once you complete the online application you will get an EIN immediately, but all application options are not that generous. The application with fax takes 4 business days, and the application that is mailed takes about 4 weeks.
Conclusion
The EIN number allows businesses to separate and secure personal finances, build business credits and pay employees. It also helps you access the best SME loans with favorable terms. The IRS website has an online tool to apply for an EIN and provides you with your tax ID number instantly. The online process is simple and free.
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