If you’re starting a business, you may need to know how to get an EIN, which is an employer identification number issued by the Internal Revenue Service for a business. It’s the business equivalent of a Social Security number. Here’s a breakdown of when you should apply for EIN and why it’s needed.
Do I Need an EIN?
The IRS uses the EIN to identify your business on all tax documents and forms.
You will need an EIN if:
- You have employees.
- Your business is structured as a corporation, partnership or multi-partner limited liability company.
- You pay employment and excise taxes or file returns for sales of alcohol, tobacco or firearms.
- Your business has a Keogh plan or solo 401(k) retirement plan.
- You withhold taxes on income, not wages, earned by a non-resident alien.
How Do You Use an EIN?
You need an EIN for your business to:
- File tax reports and pay federal income taxes and Social Security/Medicare taxes
- Get a business license or permit
- Apply for a loan
- Open a bank account
- Apply for a business credit card
- Issue Form 1099 to independent contractors
Businesses That Don’t Need an EIN
Although the IRS requires most types of businesses to have an EIN, there are exceptions. Sole proprietorships without any employees and single-owner LLCs can use the owner’s Social Security number instead of getting a separate EIN for their businesses.
How to Get an EIN
Applying for an EIN is free, and there are four ways to apply:
- Online – The IRS prefers that you make an application online through their EIN Assistant website.
- Phone – If you want to apply by phone, you can call the IRS Business and Specialty Tax line at 800-829-4933.
- Fax – To apply by fax, download a copy of Form SS-4, complete the questions and fax a signed copy to the IRS at 855-641-6935. Include your fax number for a reply.
- Mail – Download Form SS-4 and mail the completed application to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999.
If your business started small and is growing, you may want to use that new EIN for a small business loan to help meet your goals.