Employer Identification Number (EIN): Who Needs It and How to Find It
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Like your personal Social Security number, an Employer Identification Number (EIN) allows the IRS to follow your business activity. Applying for one and keeping track of it should be at the top of the to-do list for most business owners forming a company. But if you lose or forget your number, there are EIN lookup tools to help you retrieve it.
What is an EIN and how do I get one?
An Employer Identification Number is the nine-digit number the IRS requires from business owners who pay employees. But even if it isn’t required, there are good reasons to still apply for an EIN: You could use an EIN to open a business bank account, apply for business licenses and business loans, and file tax returns. It also allows business owners to give out a tax ID number that is different from their Social Security number. The main advantages of using an EIN in this case would be privacy and protection against identity theft.
How to apply for an EIN
It’s easy to apply for an EIN online. We’ll talk more about the application requirements below, but the U.S. Small Business Administration recommends applying for an EIN immediately after you register your business entity with your state or local government. The process is free and your number is immediately available to you.
Who needs an EIN?
Businesses of all types are welcome to apply for an EIN. However, the IRS requires businesses to get an EIN if you:
- Pay at least one employee
- Operate a business as a corporation or partnership
- File the following tax returns: employment, excise, or alcohol, tobacco and firearms
- Withhold taxes on income other than wages, paid to a non-resident immigrant
- Have a tax-deferred Keogh plan for employee pensions
- Are involved with the following: trusts, with a few exceptions; IRAs; tax-exempt organizations; estates; real estate mortgage investment conduits; nonprofit organizations; farmers’ cooperatives; plan administrators
TIP: If the IRS considers you to be an employer, you’ll need an EIN.
EIN lookup: How to find your business tax ID
If you previously received an EIN but misplaced your number, the IRS recommends the following steps to find or verify your EIN.
Find your original confirmation letter from the IRS.
As we mentioned earlier, when you apply for an EIN online, the number is immediately available to you. You would be able to print the IRS EIN letter, in which the IRS assigns you a number, directly from your browser. The IRS also sends you a copy in the mail. You would need to keep a physical copy of this letter to prove the EIN belongs to you.
Call any organization where you used your EIN.
Since you would likely need an EIN to open a business bank account or get a business license, the bank or license agency should have your EIN on file. Any other organization that required you to provide your EIN would keep the number on file as well.
Check old tax returns.
Previously filed tax returns for your business would be notated with your EIN. You should keep copies of tax returns and the accompanying records for two to three years, or longer depending on the details of your return.
Contact the IRS.
You could call the Business and Specialty Tax Line at 800-829-4933 Monday through Friday between 7 a.m. and 7 p.m. local time. You’d need to provide identifying information to help an IRS representative find your number. To receive your EIN over the phone, you must be either a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust or an executor of an estate.
Need a new EIN? Here’s how to apply for an EIN
A business owner, or someone who is given authority to act on behalf of the business, can apply for an EIN online, by mail, phone or fax. Avoid any websites or private businesses promising to provide an EIN for a fee.
Applying online is the simplest way to obtain an EIN — waiting for a number by mail could take weeks, which may not be practical if Tax Day is approaching. The EIN application, Form SS-4, is available to anyone whose business or legal residence is in the U.S. Here are some of the form’s requirements:
- The established name of your business. This could be your own name if you run a sole proprietorship.
- Taxpayer Identification Number, which is your own Social Security number
- Type of entity you operate
- Reason for needing an EIN
- Length of time you’ve been in business
- Number of employees expected in the next 12 months
Instructions for LLCs
If you operate your business as an LLC, you’ll need to indicate on the form how you are taxed by the IRS. By default, a domestic single-member LLC is considered a “disregarded entity” while a domestic LLC with two or more members is treated as a partnership. You would have to fill out additional paperwork if you wanted to be classified differently. Read the SS-4 instructions carefully to make sure you fill out this section correctly or follow the prompts online.
Tips for filling out Form SS-4
Some business owners may not have to fill out all sections of Form SS-4, depending on their reason for applying. If you’re applying online, the application is a series of prompts and must be completed in one sitting, and you’ll receive your EIN immediately after submitting the form. If applying by fax, you’ll be faxed your EIN within four business days of submitting Form SS-4. Those applying by mail can expect their form to be processed within four weeks. International applicants who operate a business in the U.S. can apply by answering questions from the form over the phone.
When a business needs to reapply for an EIN
Businesses may need a new EIN when the business changes hands or changes its structure. Each type of business entity has to apply for a new EIN under the following circumstances:
Sole proprietors, if you:
- Are subject to a bankruptcy proceeding
- Become a partnership
- Purchase or inherit an existing business that will operate as a sole proprietorship going forward
Sole proprietors do not need a new EIN if they change their business name or location, or if they operate multiple businesses under one name.
Corporations, if you:
- Receive a new corporate charter from the secretary of state
- Are a subsidiary of a parent corporation and have been using the parent’s EIN
- Change from a partnership to a sole proprietorship
- Are part of a new corporation that was created after a merger
Businesses that are a division of a corporation do not need a new EIN, nor do existing corporations that survived a merger. Corporations that declare bankruptcy, change names or locations, or choose to file taxes as an S corporation also do not need to apply for a new EIN. If a corporate reorganization changes only the name or the place of business, then the corporation does not need a new EIN.
Partnerships, if you:
- Leave the partnership and it becomes a sole proprietorship
- Terminate an old partnership and start a new one
Partnerships that declare bankruptcy, change names, add or change locations are not required to get a new EIN. If 50% or more of the ownership of the partnership, measured in capital and profits, changes hands within a 12-month period, the business also does not need a new EIN.
Benefits of having an EIN, even if you don’t need it
Setting up an EIN could protect your Social Security number from overexposure or falling into the wrong hands.
If you’re a freelancer, filling out tax forms with an EIN would prevent you from giving your Social Security number to everyone who paid you.
If you’re a sole proprietor, you could use an EIN rather than your Social Security number when sending 1099 forms to any contractors or freelancers you paid.
Banks may require it
As discussed earlier, many banks require an EIN for business accounts: they want to make sure you have a legitimate business and the right to sign checks as the legal, declared owner of that business. Banks don’t want to set up business accounts for anyone who could expose the institution to dangerous or illegitimate business practices.
The advantage of using a business bank account, rather than your personal one, is the ability to keep finances separate. It’s always a good idea to keep your personal and professional expenses separate.
Business credit reporting agencies also require an EIN to create credit reports. If you want to help protect your personal credit and establish a business credit profile, having an EIN is a necessary step.