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What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses and organizations for tax filing purposes. It is similar to a Social Security number for an individual.

An EIN is primarily used for tax filing and reporting purposes. Some of the specific uses of an EIN include:

  1. Filing federal tax returns: Businesses are required to use their EIN when filing federal tax returns, such as the annual Form 940 and Form 941 for employment taxes.
  2. Opening a bank account: Many banks will require an EIN as a form of identification when opening a business bank account.
  3. Obtaining business licenses: Many state and local governments require businesses to provide an EIN when obtaining licenses and permits.
  4. Hiring employees: Businesses are required to obtain an EIN before they can hire employees and are required to provide the EIN to their employees on their W-2 forms.
  5. Filing for tax-exempt status: Non-profit organizations and certain types of businesses may be eligible for tax-exempt status and will need to provide their EIN when applying for this status.
  6. Reporting pensions, annuities, and certain trusts: Trusts, pensions, and annuities that have income that is subject to tax must have an EIN.
  7. Reporting sales tax: Some states require that businesses with an EIN file sales tax returns.
  8. Reporting unclaimed property: Businesses with an EIN are required to report any unclaimed property to state unclaimed property offices.

In summary, an EIN is used for tax-related purposes, opening bank accounts, obtaining business licenses, hiring employees, filing for tax-exempt status, reporting pensions, annuities, and certain trusts, reporting sales tax, reporting unclaimed property, and other purposes.

 

How do you obtain an EIN?

Obtaining an EIN is a simple process that can be done online, by mail, or by fax. Here are the steps to obtain an EIN:

  1. Determine if you need an EIN: Most businesses will need an EIN, but there are certain exceptions. For example, sole proprietors without employees and certain types of partnerships may not need an EIN.
  2. Gather the necessary information: To apply for an EIN, you will need to provide information such as the legal name and address of the business, the name and Social Security number of the owner, and the type of business entity.
  3. Apply online: The easiest and fastest way to obtain an EIN is through the IRS’ online application. The process takes about 15 minutes and you will receive your EIN immediately upon completion.
  4. Apply by mail or fax: If you prefer to apply by mail or fax, you can download Form SS-4 from the IRS website and submit it along with the required information. The processing time for mail and fax applications is typically 4 to 6 weeks.
  5. Keep your EIN safe: Once you have received your EIN, it is important to keep it in a safe place as it will be needed for future tax filings and other business-related transactions.

It is important to note that once the EIN is assigned to a business, it will not change, even if the business ownership or structure changes. It is a permanent number for the life of the business.

In Conclusion

In conclusion, obtaining an EIN is a simple process that can be done online, by mail, or by fax. It is a unique nine-digit number assigned by the IRS to businesses and organizations for tax filing purposes. It is important to keep your EIN safe as it will be needed for future tax filings and other business-related transactions.