It is likely that there are quite a lot of administrative and regulatory things that your business has to meet. These include registering your business name and getting a permit, for instance. One of the key things all new businesses, and all restructuring businesses, must do, is get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). What is the most efficient way to find an EIN number? Here is everything you need to know about it.
What Is an EIN?
An EIN is a nine digit number that is unique to your business, identifying it for tax purposes. Basically, it is like a social security number (SSN), except that it is for a business and not an individual. You should, therefore, not use your SSN instead of your EIN, even if you are a sole proprietor.
When you own a business, you need an EIN if you are to apply for a business license, open a business bank account, and, most importantly, file your tax returns. Hence, not only do you need to know the most efficient way to find an EIN number, you need to know when to find it, which is as soon as you make plans for your business. This will help to avoid many delays.
Do You Need an EIN?
Any business with employees must have an EIN number. However, non-employers may also require one, if they are a registered partnership or corporation. If you aren't sure whether you need one, the IRS has created a helpful guide. If you answer yes to any questions in that guide, you need an EIN. There are some nuances, so make sure you read the guidelines.
Most Efficient Way to Find an EIN Number:
The quickest way to find an EIN number is to apply online with the IRS' EIN Assistant. You will be given an EIN number immediately after processing and validating your EIN, and there is no charge. Don't fall for online companies saying they will get you an EIN for a small fee, therefore. You can also complete Form SS-4 and fax it or post it to the IRS, but this does mean it will take longer (between four business days and five working weeks) for you to get your EIN.
If your business is experiencing growth and maturity, you may come to the point where you want to change its ownership or legal structure. For instance, you may have started as a sole proprietor, only to find that you need to incorporate or enter into a partnership with someone else involved in the business. If this happens, you must get a new EIN for your business, which is another way in which the EIN differs from the SSN – the SSN is for life.
In other cases, you may need a new EIN as well. If you file for bankruptcy, if the name of your business (particularly if it is a corporation) changes, if you move locations, or if you reorganize, you may need a new EIN, although not always. The IRS will be able to confirm whether you need one or not.