Employer Identification Number
- What is an EIN?
EIN stands for Employer Identification Number. It is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses and other entities for tax purposes. The EIN is used to identify a business for tax purposes, similar to how a Social Security number identifies an individual.
An EIN is required for most types of businesses, including corporations, partnerships, LLCs, and sole proprietorships with employees. It is also needed for certain tax-filing requirements, such as tax returns, employment tax deposits, and withholding taxes.
Why having an EIN is important?
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- Tax purposes: An EIN is primarily used by businesses and other entities to report taxes and file tax returns, such as income tax, payroll tax, and excise tax.
- Opening a bank account: Banks typically require businesses to have an EIN before they can open a business bank account.
- Hiring employees: If a business has employees, they must obtain an EIN to withhold and report payroll taxes to the IRS.
- Obtaining business licenses and permits: Many states and local governments require businesses to have an EIN to obtain licenses and permits to operate.
- Applying for credit: Some lenders may require businesses to have an EIN to apply for credit or loans.
- Filing information returns: If a business pays certain types of income, such as dividends or interest, to other businesses or individuals, they must file information returns with the IRS using the EIN.
Consequences of not taking EIN
- Inability to hire employees: If a business does not have an EIN, they may not be able to hire employees, as an EIN is required to withhold and report payroll taxes.
- Fines and penalties: If a business is required to have an EIN but fails to obtain one, they may be subject to fines and penalties from the Internal Revenue Service (IRS). The penalties can range from $50 to $10,000, depending on the size of the business and the length of time it has been operating without an EIN.
- Difficulty opening a bank account: Banks typically require businesses to have an EIN before they can open a business bank account. Without an EIN, a business may have difficulty obtaining financing, processing payments, and managing their finances.
- Inability to obtain business licenses and permits: Many states and local governments require businesses to have an EIN to obtain licenses and permits to operate. Without an EIN, a business may not be able to obtain the necessary permits and licenses to operate legally.
Time Limit to apply for EIN
There is no specific time limit to apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). A business or entity can apply for an EIN at any time, including before they start operating, when they hire employees, or when they need to file tax returns.
However, it is important to note that some business activities may trigger the requirement to obtain an EIN. For example, a business that is required to file employment tax returns, excise tax returns, or certain types of information returns must have an EIN before they can file those returns.
Additionally, certain types of business entities, such as corporations, partnerships, and LLCs with more than one member, are required to obtain an EIN.
It is generally recommended that businesses obtain an EIN as soon as possible, even if it is not currently required, as it can help to establish a separate identity for the business and avoid confusion with personal tax obligations.
How to apply for EIN?
You can apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) by following these steps:
- Determine eligibility: To obtain an EIN, you must have a valid Taxpayer Identification Number (TIN), such as a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). Don’t worry if you do not have a SSN or ITIN, you may still apply for EIN using “FOREIGNUS” in the SSN and ITIN space provided on EIN application form.
- Determine the method of application: There are four ways to apply for an EIN: online, by mail, by fax, or by phone.
- Complete the application: The application form you need to complete will depend on the method you choose to apply for an EIN. For online application, go to the IRS website and click on the “Apply for an EIN Online” link. For mail, fax, or phone application, you need to complete Form SS-4, which you can download from the IRS website.
- Submit the application: Depending on the method you choose; you will need to submit your completed application form to the IRS. For online application, you will receive your EIN immediately upon completion of the online form. For mail, fax, or phone application, you will receive your EIN by mail or fax within four weeks.
- Start using your EIN: Once you have obtained your EIN, you can start using it for tax and business-related purposes, such as filing tax returns, opening a bank account, and applying for business licenses and permits.
EIN Application Form
The application form for an Employer Identification Number (EIN) is Form SS-4, which is available on the website of the Internal Revenue Service (IRS). Here are the steps to obtain and complete Form SS-4:
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- Go to the IRS website: Visit the IRS website at www.irs.gov.
- Search for Form SS-4: In the search bar, type “Form SS-4” and click the search button.
- Download the form: Click on the link to download Form SS-4. You can choose to download the form as a PDF file or as a fillable form that can be completed online.
- Complete the form: Fill out Form SS-4 with the necessary information, such as the legal name and address of the business, the type of entity, the reason for applying for an EIN, and the name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the responsible party. If you do not have a SSN or ITIN then you may use the word “FOREIGNUS” in the SSN/ITIN space on the Form SS-4. The responsible party is the person who controls, manages, or directs the entity and who is applying for the EIN.
- Submit the form: Depending on the method you choose to apply for an EIN, you will need to submit your completed Form SS-4 to the IRS. You can submit the form by mail, fax, or phone.
- Wait for the EIN: After the IRS receives your Form SS-4, it will process your application and assign you an EIN. If you applied by mail, fax, or phone, you should receive your EIN within four weeks. If you applied online, you will receive your EIN immediately after submitting the application.
It is important to complete Form SS-4 accurately and completely, as errors or omissions can delay the processing of your application.
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