What is an Employer Identification Number or EIN, & Why is It Important
If you're starting a new business or just taking over the management of an existing one, an Employer Identification Number (EIN) is a tool that will help you set up your company for success.
An EIN is basically like a social security number for businesses; it lets you do things like open a bank account and apply for credit cards.
This article will explain how to get an EIN, why it's important, and more about this essential little number!
What is an Employer Identification Number or EIN?
An Employer Identification Number or EIN is a number that the authorities assigns to businesses and other entities, such as trusts and estates.
You'll need an EIN if you have employees and want to open a business bank account or if you're applying for a license or permit from your state government.
An EIN serves as an employer identification number. When you start a business, you can apply online under "Apply For an Employer Identification Number" (see Resources).
The application process takes only about 10 minutes and requires basic information like your name and address, along with proof of citizenship or legal residence if applicable.
Once the authorities has approved your EIN, it will be sent to any business bank accounts where it should be used when depositing money into those accounts for tax purposes.
Here are some of the situations when you might have to get an EIN
- You're starting a business.
- You have an employee.
- You're an independent contractor.
- You're a sole proprietor and on the payroll.
- You're a corporation or LLC, as well as partnerships and nonprofits (including churches, civic organizations, and religious organizations). Trusts that file taxes with the authorities may also need one for their own purposes.
An EIN can let you do some pretty cool things.
If you have got a business, an EIN will let you do some cool things. Let's take a look:
- Open a bank account. You'll need one if you want to accept credit card payments for your goods or services. Banks usually require an EIN before they'll open an account for you, so don't worry about giving them the wrong number or anything like that—they won't be doing business with themselves!
- File taxes. An EIN is required when filing taxes as self-employed individuals, so whether it's as a sole proprietorship or LLC (limited liability corporation), all businesses must obtain this number in order to complete their tax returns on time and accurately.
- Do government business. Government departments and agencies often have contracts with companies and organizations that provide goods or services necessary for fulfilling those contracts; therefore depending on what type of business venture(s) your company is engaged in may determine whether or not obtaining an EIN is required by law before entering into any contractual agreements with these entities at all levels (local/state/federal). In addition, having obtained one beforehand helps ensure compliance with state laws regarding child labour laws as well as due diligence when considering how much each worker should earn per hour worked during normal working hours since there are rules about how long children under 18 years old can work before school starts again after summer break ends etc...
You'll also need an EIN if you apply for any business credit card.
You'll also need an EIN if you apply for any business credit card. You can apply for an EIN online or by phone and receive your number in as little as 5 minutes.
The first step to getting an EIN is to make sure you need one.
The first step to getting an EIN is ensuring you need one. If you are a sole proprietor, a business owner, or a corporation—or if you have employees—you will need an EIN.
If you’re an individual and have a side business, you need an EIN.
You may also be required to get your own EIN if you run an LLC or partnership that has employees or contractors.
There are two ways to apply for an EIN.
The first step in applying for an EIN is to determine which method you'd like to use. there are offers two options:
- Online—This is the fastest, simplest method of applying. It's also the preferred option for those new to filing taxes or who don't have much experience with technology. If you decide to go this route, ensure your computer has a reliable internet connection and that you have all the required information before starting the application process.
- Phone—If you don't feel comfortable using online applications or aren't able to access them (for example, if there are issues with your internet connection), calling may be more convenient than going through an entire application process on another platform entirely. Just keep in mind that this process takes longer than completing one via phone or e-mail because someone from an authorities office will need to verify some details about your company before issuing an EIN.
This is the information you'll need when you apply for an EIN, no matter how you're doing it.
Before you can apply for an EIN, you'll need to have the following information ready:
- Name of your business.
- Business type (sole proprietorship, partnership, corporation, etc.)
- Address of your business.
- Organization type (individual, sole proprietorship, partnership, corporation, etc.). This is important! If you're using a subchapter S corporation or a limited liability company (LLC), make sure that's what is entered here; otherwise, the authorities may reject your application or give you the wrong EIN.
And here's what you'll need if you apply for your EIN by phone.
When you apply by phone, you’ll need to provide the following information:
- Your name and address.
- The name and address of your business.
- The type of entity you are (sole proprietor, partnership, corporation). If it's a corporation or LLC, the state or jurisdiction where it was formed.
- The date your business was established differs from when it started operating under its current trade or DBA name.
- Your social security number if you've been assigned one as an employee at a company with which you've filed jointly—not applicable for sole proprietorships/single-member LLCs/partnerships (see next bullet point).
- Your employer identification number if applicable—again, not applicable for sole proprietorships/single-member LLCs/partnerships (see next bullet point).
If you choose to apply online, there are extra steps you'll need to follow.
You'll have to provide your name and address. You'll also be asked for your Social Security number and the business's legal name, address, type of business, and employer identification number (EIN).
If you prefer to apply by phone, these are the next steps in the process.
- You'll be asked to provide information about yourself, such as your name and address.
- You will also be asked to read and agree with a Privacy Act Statement that explains how the authorities handles personal information. In addition, you must confirm your authority as an authorized representative of the business.
How Long Will It Take to Get an EIN?
It generally takes 24 to 48 hours to get your Employer Identification Number or EIN.
The authorities will issue you the number within 48 hours if you apply online and have a valid email address on file with them (you can also send in an application by mail).
If you need to call the authorities, it will take longer because they don’t have access to their EIN database while they are working with customers over the phone.
What is the importance of an Employer Identification Number?
The EIN is a nine-digit number that identifies your business, whether you're an individual or a corporate entity.
It's used to file taxes and apply for business credit cards, payroll, and other financial transactions.
You must apply through the authorities website or by mailing Form SS-4 (Application for Employer Identification Number) to obtain one.
If you don't have an account online with the authorities, this can also be done through the mail.
Once approved, the authorities will send you a confirmation letter containing the information needed to use your new EIN number.
Closing Your Employee Identification Number
To close your EIN, contact the authorities and tell them that you're no longer in business.
They'll ask for information about why you're closing; then, they'll process the request and close your employee identification number.
If it's been a while since you've used your EIN, be sure to check with the authorities customer service centre before applying to close it.
What Happens If You Lose or Misplace Your EIN?
If you've lost your EIN, you can apply for a new one. While there is no way to recover an EIN that has been lost or stolen, it is possible to reapply and receive another.
For this purpose, you will need the following:
- A valid address where the business is located
- An individual who is authorized to represent the business (this person must have a valid SSN)
Once you've gathered these items and are ready to proceed with the application process, there are several methods available:
- Online submission of Form SS-4 (EINs cannot be obtained by fax or phone)
An Employer Identification Number is a great tool that can help set your business up for success.
An EIN is a great tool that can help set your business up for success. It can be used as an identifier for your business, and it's also used for certain tax and financial purposes.
Here are some of the ways you can use an EIN:
- For tax purposes
- For business credit cards
- For business bank accounts
- For filing taxes as a sole proprietorship, partnership or corporation (no matter what size) through online filing using e-file software and the authorities website.
- When applying for licenses to do business in other states or countries
As you can see, an Employer Identification Number is a great tool that can help set your business up for success.
It's also important to remember that if you need one, there are two ways to apply for an EIN: online or by phone.
If you're applying by phone, make sure you have all of the necessary information before calling the authorities and keep in mind that it may take up to three weeks before your application is processed.
FAQ's related to What is an employer identification number or EIN
1. What is an Employer Identification Number or EIN?
The Employer Identification Number (EIN) is a nine-digit number assigned by the authorities to businesses. It's an identification number that all businesses have, both domestic and foreign. The EIN lets you file taxes, open bank accounts, etc., without disclosing your personal information.
2. What are the situations when you might have to get an EIN?
If you plan on hiring employees--even part-time ones--then it's best practice to apply for one before they join your business so they can start working right away without any hiccups getting set up with their own tax numbers and paperwork.*If your business has foreign income then it's important that you get an EIN for yourself because otherwise these earnings may not be taxed as expected in other countries.*If someone asks for this number from one of your vendors or suppliers then it's good practice just in case!
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