How to obtain an EIN for a business

If you’re starting a business, obtaining an Employer Identification Number (EIN) is a crucial step. An EIN is a nine-digit number issued by the IRS that helps you establish your business as a separate legal entity from its owners and employees.

What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit number issued by the IRS to businesses for tax and other identification purposes. An EIN helps you establish your business as a separate legal entity from its owners and employees, allowing you to open bank accounts, apply for loans, and file taxes for your business.

Why do I need an EIN?

As a small business owner, obtaining an EIN is crucial for several reasons:

• Opening a bank account: Most banks require an EIN to open a business checking and savings account. Without an EIN, you won’t be able to separate your personal finances from your business finances.
• Applying for loans: Lenders often require an EIN to verify the identity of the business owner and the legitimacy of the business.
• Filing taxes: An EIN is required to file taxes for your business, including income tax returns, payroll tax returns, and sales tax returns.
• Hiring employees: If you plan to hire employees, you’ll need an EIN to establish a payroll system and file payroll tax returns.
• Protecting your personal assets: An EIN helps protect your personal assets from being at risk if your business is sued or faced with legal issues.

How do I get an EIN?

Obtaining an EIN is a straightforward process, and it’s free of charge. You can apply for an EIN online, by fax, or by mail. Here are the steps to follow:

1. Visit the IRS website (https://www.irs.gov/businesses/ein-online) and click on “Apply for an Employer Identification Number.”
2. Fill out the EIN application form, which will ask for basic information about your business, such as its legal name, address, and industry. You’ll also need to provide your social security number or individual taxpayer identification number (ITIN).
3. Submit your application online. Once you submit your application, you’ll receive an immediate confirmation from the IRS that it has received your application and is processing it.
4. Wait for your EIN: The IRS processes EIN applications quickly, usually within a few minutes or hours. You can check the status of your application on the IRS website.
5. Print your EIN: Once you receive your EIN, print it out and keep it in a safe place. You’ll need to provide your EIN whenever you apply for business licenses, permits, or other legal documents.

Fax Application

1. Fill out the EIN application form and fax it to the IRS office responsible for issuing EINs in your area. You can find a list of IRS offices and their contact information on the IRS website.

2. Wait for your EIN: The IRS processes EIN applications by fax quickly, usually within a few days or weeks.

3. Print your EIN: Once you receive your EIN, print it out and keep it in a safe place. You’ll need to provide your EIN whenever you apply for business licenses, permits, or other legal documents.

Mail Application

1. Fill out the EIN application form and mail it to the IRS office responsible for issuing EINs in your area. You can find a list of IRS offices and their contact information on the IRS website.

2. Wait for your EIN: The IRS processes EIN applications by mail slowly, usually within a few weeks or months.

3. Print your EIN: Once you receive your EIN, print it out and keep it in a safe place. You’ll need to provide your EIN whenever you apply for business licenses, permits, or other legal documents.

Tips for Obtaining an EIN

Here are some tips to help you obtain an EIN quickly and efficiently:

• Make sure your information is accurate: Double-check that the information you provide on your EIN application form is correct, complete, and up-to-date. Inaccurate or incomplete information can delay the processing of your application.
• Choose the right method of application: Online applications are usually the quickest and most convenient way to obtain an EIN. However, if you prefer to apply by fax or mail, make sure you allow enough time for the IRS to process your application.
• Keep your documents organized: Gather all the necessary documents required for your EIN application, such as your business formation documents, driver’s license, and social security number or ITIN. Keep these documents organized and easily accessible to save time during the application process.
• Be patient: Obtaining an EIN can take a few days or weeks, depending on the method of application and the volume of applications being processed by the IRS. Be patient and allow enough time for the IRS to process your application.

FAQs

Here are some frequently asked questions about obtaining an EIN:

Can I obtain an EIN for a sole proprietorship?

Yes, you can obtain an EIN for a sole proprietorship. However, you don’t need an EIN if you’re running your business as a sole proprietorship and you don’t plan to hire employees or apply for loans.

Do I need an EIN to open a bank account?

Most banks require an EIN to open a business checking and savings account. However, some banks may allow you to open an account without an EIN if you have a valid business license or other legal documents that establish the identity of your business.

Can I obtain an EIN for a partnership?

Yes, you can obtain an EIN for a partnership. However, you’ll need to provide the names and social security numbers or ITINs of all partners on the EIN application form.

Do I need an EIN if I’m selling products online?

If you’re selling products online and you plan to report your income on a 1099-K, you’ll need to obtain an EIN. However, if you’re just starting out and you haven’t made any sales yet, you don’t need to obtain an EIN right away.

Can I obtain an EIN for a trust or estate?

Yes, you can obtain an EIN for a trust or estate. However, the process is slightly different from obtaining an EIN for a business. You’ll need to fill out Form SS-4, the EIN application form for individuals, and provide information about the trust or estate.

Summary

Obtaining an EIN is an essential step in starting a business, especially if you plan to hire employees or apply for loans. The process is straightforward and can be completed quickly by fax, mail, or online. By following the tips and information provided in this guide, you’ll be well on your way to obtaining an EIN and establishing your business legally.