If you own a small business, you probably need a federal business tax ID number. Also known as the Employee Identification Number (EIN), this number works much like your Social Security number in the sense that it is a unique identifier for your business.
You will eventually use an EIN on all your federal business tax documents and forms and for many of your state and local tax documents as well. This number is important when applying for business licenses and permits and if you’re thinking of setting up a bank account for your business.
The IRS makes it fairly straightforward to obtain an EIN online. However if you need an expert, Zen Business is here to help.
- The IRS requires you to get an EIN if your store is located in the United States or a US territory and you have employees, you withhold taxes on the wages and salaries you pay, or you operate the business as a corporation or partnership. An EIN number is also needed for different businesses like trusts, estates, and nonprofit organizations.
- LLCs with employees other than the owner will also require an EIN. Single-member LLCs that only employ the owner and sole proprietorships usually don’t require an EIN, but if you want an extra degree of separation between yourself and your business you can still obtain one and use it instead of your Social Security number.
- The IRS has an online application system to obtain your EIN immediately after you complete your submission. If you feel like you want to apply yourself, click here.
- Use Form SS-4 when applying for an EIN, and keep your valid Taxpayer Identification Number present when you apply. The IRS states you can use your SSN, individual taxpayer identification number (ITIN), or EIN.
- Visit the IRS website and click on the “Apply for an Employer ID Number (EIN)” button, which takes you to a new page.
- Read the instructions on the EIN application page and click “Apply Online Now” to reach the EIN Assistant page.
- Click “Begin application.”
Firstly, you’ll be asked to select the type of EIN which you’re applying for. This the the business structure you had previously decided on such as sole proprietorship, partnership, etc. The application questions will differ depending on which type of EIN you’re applying for. You will have to explain why you’re requesting an EIN and submit your name, social security number, and any other relevant information the IRS may ask you to provide.
Once all of the questions have been answered, click on the ‘Submit’ button. The system will automatically generate a new EIN that you can begin to use immediately. This number cannot be cancelled and will never be reassigned.
A document confirming your application and providing you with your EIN will automatically download to your computer. Make sure you keep a copy for your records. If you ever lose track of your number and forget it, you can always retrieve it from the IRS.
Filing for an EIN is a basic but essential step in the founding of a small business. Starting off on the right foot with the IRS and your local tax authorities is necessary to build a strong, successful business.