You are probably familiar with how your personal Social Security number (SSN) works and
what you need to use it for. An Employer Identification Number (EIN) serves the same purpose, but for your business. An EIN is a unique identifier that allows the Internal Revenue Service (IRS) to track your business earnings and tax reporting. You will use it to file your business taxes and your payroll taxes. If you live in a state with a sales tax, and your business offers taxable products or services, you will also need an EIN to pay in your collected sales taxes. You may also need one to file for various permits or licenses for your business.
Do I need an EIN?
There are many different types of businesses, and not all businesses have to file for an EIN. However, an EIN is always necessary for:
- Corporations, both S-Corps and C-Corps
- Multi-member LLCs
- Nonprofit Organizations Trusts and Estates
- Any type of business with employees
If you have registered your business as a sole proprietorship or Limited Liability Company
(LLC), you may not need one. However, even if you are not legally required to file for one, an EIN can be beneficial. An EIN may even be necessary for some financial purposes. So, you may still want to consider applying for one. You should always apply for one after registering your business. This will ensure that it is tied to the correct business name and filed under the appropriate business type.
What can an EIN be used for?
Employer Identification Numbers are primarily used for tax reporting purposes. You will need one to file both your business taxes and payroll taxes. So you must have an EIN before you can hire and pay employees. If your business is registered as a sole proprietorship or single-member LLC, and you do not have any employees or excise tax liabilities, then you are not required to file for an EIN.
However, there are many benefits of having one, even if you do not legally need it.
If you want to open a business bank account, most banks will require an EIN. You will also need one to apply for a business credit card or loan. Additionally, an EIN keeps you from having to use your personal SSN for business purposes. This helps protect your personal information and minimizes the risk of identity theft.
You may need to provide your tax ID information to other businesses or vendors. In this case, an EIN can make your business seem more professional and credible. There is also the added benefit of a more defined separation between your personal and business finances. This can help protect your personal assets if your business is in debt.
What’s the difference between an Employer Identification Number and a Tax ID Number?
The terms EIN and Tax ID Number (TIN) are often used interchangeably. This is because an EIN is a type of TIN. The term TIN refers to any nine-digit number issued for tax identification purposes. This includes Federal Tax ID numbers, State Tax ID numbers, and personal SSNs.
EINs fall under the Federal Tax ID numbers category, and most businesses will need one. However, State Tax ID numbers are not used as often and are unnecessary for many businesses. A business needs a State Tax ID when applying for local permits and licenses, such as alcohol or tobacco sales, or for local sales tax purposes.
When dealing when the financial and tax aspects of your business, you may hear the terms business tax ID number, federal tax ID number, or simply tax ID. In this type of setting, they are referring to your business’s EIN.
How can I file for an Employer Identification Number online?
If you need an EIN for your business, the fastest and easiest way to get one is to file for one online. However, you probably know how confusing IRS forms can be and are already expecting to wait months for your EIN. We get it, and that’s why we created a streamlined application system to make filing for an EIN as fast, simple and hassle-free as possible. It will only take you a few minutes to fill out the short application, and you can get your EIN in as little as 30 minutes.
Tax laws and requirements can be incredibly complicated and difficult to understand. So it’s easy to incorrectly file for your EIN. This puts you at risk for penalties and incorrect withholdings, and it is not easy to correct. Our dedicated agents are experts on IRS rules and regulations.
They are here to answer any questions you might have and make sure that your application is filed correctly. Click here to get started on your application and get your EIN as quickly and easily as possible.