IRS EIN/TAX ID FAQs

Most businesses are required to have an EIN even if they don’t have employees. EIN (Employer Identification Number) is a unique, nine-digit number issued by the Internal revenue services (IRS) to identify the business. Getting the EIN is an easy process that can be done online as well.

An EIN (Employer Identification Number) is a federal tax ID, a unique nine-digit number represented by the format 12-3456789. This number is used by the Internal Revenue Services (IRS) and other federal agencies to identify a business for the purpose of taxation. EINs are used by employers, sole proprietors, and entities like corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities. Every entity that needs an EIN must have only one EIN.

An EIN is mandatory for some businesses and optional for other cases. It is beneficial to have EIN for independent contractors and small business owners. EINs create a pathway for business owners to file the tax forms. Corporates, partnerships, and limited liability companies are required to have EINs. Sole proprietorships are not required to have an EIN generally but it is necessary if they have employees, want to offer 401(k), or need to file for bankruptcy. The IRS requires EINs for the trusts formed by estate funds and representatives who oversee an estate that operates a business after the death of its owner. Independent contractors, freelancers, people running a small business from their homes are not necessarily required to get an EIN, but still, there are plenty of reasons why they should get one.

You can apply for an EIN either online or using IRS form SS-4 (Application for Employer Identification Number). For applying, you need to supply information about your business, including the industry type and projected number of employees.

It should take around five minutes to complete the process of submitting an EIN application online.

You will receive your EIN in either 2-3 business days or 60 minutes, depending on the delivery option selected by you. You will receive an e-mail containing your EIN number, which can be used for various purposes, and you can start using it immediately.

Information sent through EIN application forms is secured by a 256-bit encryption SSL certificate. Safety measures have been taken to avoid any leak of information, and the platform is completely safe for you to send your information using EIN application forms.

Yes, a new EIN is crucial for the identification of business for tax purposes. Major problems may arise if you use the previous owner’s EIN, particularly if any tax issues like unpaid payroll taxes or improperly claimed credits were involved before the business was sold.

Much like the Social Security Number, the government uses your EIN to identify your business. Every corporate must pay its share of taxes, even if they don’t have any employees. Banks, credit card companies, and vendors are likely to demand EIN before proceeding with the transactions.

Yes, EIN and Social Security Number are different from each other. EIN (Employee Identification Number) is issued to a business owner who plans on hiring employees, and SSN (Social security Number) is issued to an individual who works for an employer. Both of them are used for taxation purposes, but the EIN is strictly business-specific. A person may have both EIN and SSN if s/he is a small business owner and an employee at the same time.

You cannot avoid using your SSN on your personal tax forms, but there are other places where you can use EIN to make your business finances more secure and organized. Having an EIN can help you separate your business and personal finances. EIN allows you to conduct business without sharing your Social Security Number and thus helps you protect your identity.

An EIN can be used for several purposes. You can easily open a bank account in the USA as most banks require an EIN. EIN can be used to apply for business permits and file tax returns. You can start a corporation or partnership using EIN and withhold taxes, enabling you to file the relevant taxes to the tax authority as required.  You can use EIN to apply for credit cards or loans easily. An EIN can also be used to create a trust, estate, or non-profit organization. You can hire employees if you have an EIN, which will help your business to achieve continued growth.