How to Get an EIN: A Step-by-Step Guide
If you are running a business in the United States, then you need to apply for an Employer Identification Number (EIN). This nine-digit number is used by the Internal Revenue Service (IRS) to identify your business for tax purposes. In this article, we will guide you through the steps to obtain an EIN, and explain why it is important to have one.
What Is an EIN and Why Do You Need One?
An EIN is a unique nine-digit number that is assigned to businesses by the IRS. It is used to identify your business for tax purposes and is necessary for several reasons:
- To hire employees
- To open a business bank account
- To apply for business licenses and permits
- To file business tax returns
Most types of businesses require an EIN, including sole proprietorships, partnerships, LLCs, corporations, non-profit organizations, and estates and trusts.
Applying for an EIN from the IRS is free, and you can do it online or through other methods such as fax and mail. Generally, you will receive your EIN immediately when applying online. When applying through fax or mail, the process can take up to one month to complete.
Documents Required to Apply for an EIN
Before applying for an EIN, you will need to gather some important information about your business such as the business name, principal officer name, entity type, and business address. This information is required to complete the application form.
How to Apply for an EIN Online
Applying for an EIN online is the quickest and easiest method. Here are the steps to follow:
- Go to the IRS website’s EIN Assistant page.
- Select the legal structure of your business.
- Fill out the application, providing detailed information about your business. Double-check your answers to confirm their accuracy before submitting the application.
- After submitting the application, write down your EIN as it will be displayed on the confirmation page. You may also receive your EIN in the mail within four weeks.
If you need more information, the IRS provides a step-by-step guide for applying for an EIN online here.
How to Apply for an EIN by Fax or Mail
If you prefer to apply for an EIN by fax or mail, you will need to complete Form SS-4. You can download the form from the IRS website, complete it, and then fax or mail it to the IRS. Here are the steps to follow:
- Download Form SS-4 from the IRS website.
- Fill out the form with detailed and accurate information about your business.
- After completing the form, fax or mail it to the appropriate fax number or address provided on the form. You should receive your EIN within four weeks.
Using Your EIN Correctly
It is important to use your EIN correctly to avoid any issues with the IRS. Your EIN is used to identify your business, and you may need to provide it when filing tax returns, opening a business bank account, and applying for business licenses and permits. Keep your EIN in a safe place and be sure to use it correctly when asked by banks and other businesses.
Consequences of Not Obtaining an EIN
If you fail to obtain an EIN, you could face some potentially serious consequences. For instance, the IRS could impose penalties and fines on your business, jeopardize chances for getting federal government contracts and limit your ability to do business with other companies. In some cases, you may not be able to get licenses and permits required to do business.
Common Issues to Avoid
When obtaining an EIN, there are some common mistakes to avoid, such as submitting inaccurate information or using a Social Security Number instead of an EIN. These mistakes can lead to delays in obtaining your EIN, or even cause issues with the IRS. Double-check your information before submitting your application to ensure it is correct and accurate.
Obtaining an EIN is an important step for any business owner to take. It is required for many purposes, including filing taxes, hiring employees and opening a business checking account. The application process is easy, and you can apply for an EIN online, by fax or mail. It is important to use your EIN correctly and avoid common mistakes to prevent any issues with the IRS. If you still have questions, the IRS website offers additional resources for obtaining an EIN.