Employer Identification Number (EIN)

What is EIN?

EIN, or employer identification number is a unique 9-digit number assigned by the IRS. It works like an SSN (social security number), by which individual resident identities are verified. The IRS issues the EIN to business entities. EIN is also popularly known as a Federal Tax Identification Number. The IRS gets information about the state where the business is registered through the employer identification number.

To identify the taxpayers who are needed to file various tax returns, the agency uses the EINs. The IRS provides the EIN with a nine-digit number in the format of XX-XXXXXXX. Businesses that have employees and pay taxes or withhold taxes from income must have EINs. Businesses need EIN for multiple purposes, such as contracts, state accounts, and banking. EIN is required during federal tax reporting.

Who Needs an EIN?

Business entities that have a federal tax ID in their organization must have EINs. These businesses include corporations, partnerships, multiple-member LLCs (limited liability companies), S-corps, and C-corps. However, tax-filing corporations or partnerships must have EINs, regardless of whether they have employees.

Some other business entities are also required to have EINs, and those businesses are:

• NPOs (nonprofit organizations)
• Businesses that have a Keogh plan
• Estates
• Businesses that withhold taxes
• Business entities that file excise or alcohol, tobacco, and firearms tax returns
• Government entities
• Personal service corporations
• Military entities

How to Get an EIN?

Getting the EIN from the IRS is completely free of cost. If you apply online, you will get the employer identification number immediately. Although foreign businesses have to file it by phone or email, as they are not allowed to apply online. For mail or fax, the businesses must fill out the SS-4 form. The information you have to put during the application of EIN is as follows:

• Businesses’ legal name
• Trade name of the business
• Business entities’ mailing address
• Number of owners of the business
• Start date or acquisition date of the business
• The name and personal taxpayer identification number
• Business type
• Principal industry of the business