What is an EIN and Does my Business Need One?

This business owner is a EIN genius!

An employer Identification number, or more commonly known as an EIN, is used by the IRS to identify your business. Think of it as your companies Social Security Number. Many new small business owners have questions about EINs and if they will need to possess one. So we decided to provide a few answers.

What is an EIN?

Your business’s EIN will be a string of nine digits same as your social security number, but they can be easily distinguished because of their format (EIN: 12-3456789 SSN: 123-45-6789.) Although this number is labeled as an identification for “employers,” your business may still require an EIN.

Who Needs an EIN?

Obviously, if you are an employer no matter the size of your business must have an EIN. If you hire contractors, or if you hire any other non-employees whose services amount to more than $600 during the tax year. Also if your business involves estates, farmers’ cooperative, employee plans, non-profit organizations, or real estate mortgage investment conduits.

Lastly, your business structure may require you to possess an EIN. If your business is organized as a corporation, limited liability company, partnership, or joint venture you are obligated to have an Employer ID Number.

I’m a Sole Proprietor do I need an EIN?
If you don’t have any employees, you probably don’t need an EIN. You will be filing your business income taxes along with your personal taxes, so you can simply use your Social Security Number as your business ID.

What is the Use of an EIN?

You will use an EIN on business licenses, business permits, and tax returns, as well as any other forms or applications that require you to fill under your businesses IRS number. You will also need an EIN to open a business bank account. I highly suggest this so you can keep your personal and business account separate.

How do I Apply for an EIN?

It’s a relatively simple process; you can apply in less than 10 minutes free at the IRS website. If you apply online once you receive your number it can be used immediately. If you prefer to apply via FAX, phone, or mail, you will need to read the IRS guideline because restrictions do apply.

However, if you decided to apply using any other method other than only you will need to wait approximately two weeks for it to be active in the IRS data base.

Don’t Apply for an EIN When?

  • If the name of business changes
  • Your corporation or partnership declares bankruptcy
  • Your corporation files its taxes as an S corporation
  • If the location of your business changes

At ExpressTaxFilings we love supporting small business owners because we believe that when you succeed, we succeed! We are always here to help you successfully file your business taxes online on your own using our IRS authorized e-filing process! We hope you found this information informative and interesting, please comment and share! Click here for our latest blog.

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