If you are in the process of starting a new business, you probably have a curated list of things you need to set up to get your business up and running. Acquiring an Employer Identification Number (EIN) is probably one of those things you need to do. However, if this is your first business, you are probably wondering how to do that. Can I do it, or do I need to pay a professional to complete the process for me?
Well, don’t sweat it. Applying and getting an EIN is a breeze, and you can complete the process within a few minutes. This article aims to equip you with the information you need to acquire an EIN for your business.
What is an EIN, and why is it important
Before we get to the juicy part, let first discuss what an EIN is and why it is crucial for your business. An EIN is a unique nine-digit number assigned to a business by the Internal Revenue Service (IRS). This is the number used by the government to identify your business for tax purposes. Just like the Social Security Number is used for individuals.
It is the responsibility of every business to ensure that they have a viable EIN. After all, besides it being essential for tax purposes, there are various other reasons you might need an EIN for your business. For example, it is mandatory to have an EIN when opening business bank accounts or applying for business licenses.
All businesses need an EIN, except for a sole proprietor without employees. In which case, use your own Social Security Number as a tax ID. However, you are required to obtain one if you hire employees or start filing pension or excise tax returns.
However, it is advisable to visit the IRS website to determine if you are exempt from EIN registration. You should also visit Payment cloud to learn more about EIN and the best tools to use in your business.
How to Apply for an EIN
Now that we got that out of the way. Let’s dive right into it. How do you apply for your business EIN? There are four basic ways to apply for an EIN. In each of the processes, the most crucial part is to ensure that the IRS Form SS-4 is filled out correctly and with the correct information.
Once the form is ready, the rest of the process is relatively straightforward. Let’s go through each process and help you pick one that is applicable for your business and relatively convenient for you.
Online EIN Application
The online application is the easiest and most preferred method of application. However, to use this option, the business must satisfy two basic requirements;
- The business must have its principal business’s legal residence (office or agency) in the United States or U.S. Territories.
- The responsible party (general partner, grantor, owner, trustor) must have a valid Tax Identification Number.
Once you have filled out your online application, the system will automatically validate your information and issue an EIN immediately. However, according to the IRS, the application process must follow the following rules to be successful.
- The application can only be completed in one session – you can’t save the form to come to complete it later.
- Each application session will expire in 15 minutes of inactivity. Once expired, you will lose all data and will need to start over again.
Therefore, we recommend you print out the IRS Form SS-4 and prepare the answers beforehand. This will make the application much more seamless. If you have any doubts, you can get an attorney or a tax professional to help.
If you do not qualify for an online application, the next best option is to apply via telephone. Call Business & Specialty Tax Line at (800) 829-4933 if you are in the United States or (215) 516-6999 if you call from outside the country.
Ensure that you call in between 7:00 a.m. and 10:00 p.m. local time, Monday to Friday. If you are in a different time zone, remember to keep in mind the time difference. Just like in the online application, it is advisable to have a pre-filled IRS Form SS-4 ready as the agent will ask these questions when you call in. Also, remember to name a responsible party.
The agent will fill in your information and issue you an EIN by the end of the conversation if all your information is verified.
Application via Fax
Domestic businesses can also apply for EIN via FAX. You only need to download and fill a Form SS-4 and then FAX it to your State FAX number. Your business EIN application will be assessed using the appropriate application procedures.
Once approved, your EIN will be issued and faxed back to you within four working days. However, if the information on your Form SS-4 is not sufficient, the process might take much longer.
Application via Mail
To apply through mail, download and fill out the SS-4 PDF and mail it to the address found on “Where to File Your Taxes” on the IRS website.
If it is determined that you qualify for EIN, you will be issued your EIN following the appropriate procedures and receive a mail with the confirmation within four weeks. It will take longer if the information provided is not sufficient.
How much will it cost me to apply for an EIN?
Applying for an EIN is free. However, if you use the service of a professional (an attorney or a professional tax consultant), they will likely charge you for their service. The cost varies depending on the professional and the services offered.
Also, if you use a telephone or mail, there might be toll charges or mailing charges incurred. Besides these costs, there are no actually filling costs for an EIN with the IRS.
Acquiring an EIN is an essential step for your business growth and, therefore, should be given the seriousness it deserves. It will help you keep up with the legal, financial, and regulatory requirements and successfully grow your business.
Remember, you do not need to spend money to get your EIN. Follow one of the above procedures, and you will get your business registered with the IRS in no time.