It also makes it easier to keep business and personal finances separate, which is beneficial for tax and legal reasons. An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) in the United States. The purpose of an EIN is to identify businesses, estates, trusts, and other entities for tax-related purposes. Proper and secure use of tax identification numbers is essential to prevent identity theft and fraud.
What is an EIN? Comprehensive Guide to Tax Identification Numbers
This identifier is very similar to a Social Security Number (SSN), but for businesses rather than individuals. Where individuals use their Social Security Number, businesses use an EIN as their Taxpayer Identification Number. If you plan to start any type of business, then you’ll likely need an Employer Identification Number (EIN).
Business name change
There are no costs or hidden fees required when applying for an EIN. Once your information has been verified and approved, you will immediately be assigned an EIN. You will also receive an EIN confirmation notice that you’ll be able to download, save, and print. That’s because the IRS asks for your date of business formation when you apply for an EIN.
Prevent Identity Theft
- Applying for an EIN costs nothing and can be done by phone (for those who aren’t in the U.S. but will do business in the country), fax, mail, or online.
- However, having an EIN or FEIN has many benefits which can help you with your personal and business expenses, income, and tax.
- It’s important to note that FEINs do not expire, so once your business has been assigned this number, it will be the permanent federal tax identification number for your business.
- It’s a particular number that proves that an entity has a continuous existence and keeps expiration until it is extremely different or ineligible to earn the same FEIN.
- If you are forming a legal entity (LLC, partnership, corporation or tax exempt organization), form your entity through your state before you apply for an EIN.
- You are limited to applying for one EIN per “responsible party” per day by the IRS.
This is akin to how possessing a German-English dictionary aids in language translation. This unique tax ID is your business’s lifeline to the Internal Revenue Service, acting as a social security number for your company. If you work for yourself, it’s not as vital to have an EIN or FEIN as long as you do not take on employees. However, having an EIN or FEIN has many benefits which can help you with your personal and business expenses, income, and tax. The only major difference between a FEIN and an EIN is the context in which they are referred to. Essentially, when someone refers to an EIN when they mean a tax identification number, an EIN would be the tax ID number you use for state tax whereas a FEIN is used for national tax purposes.
How to Apply for an EIN
If you’re unsure about your eligibility or the application process, consider consulting a legal or financial professional. For many international applicants, working with a U.S.-based advisor can help avoid delays and ensure IRS compliance. Submitting Form SS-4 by fax generally results in the EIN being assigned within four business days. Conversely, the standard processing time for applications submitted via traditional mail is significantly https://www.bookstime.com/ longer, typically ranging from four to five weeks. Utilizing the fax method is highly preferable to standard mail for any applicant who is not eligible for the immediate online process. The applicant must also definitively select the type of legal entity being registered, such as a Limited Liability Company (LLC), a C-Corporation, an S-Corporation, or a non-profit organization.
What Is an Employer Identification Number (EIN)?
Most US businesses need an EIN to operate legally, especially if you plan to hire employees or separate business finances from personal finances. The quickest and preferred method to receive an EIN is through the IRS’s online application process. It is available to all entities whose principal business, office, or agency, or legal residence (in the case of an individual), is located in the United States or U.S. The online application is immediate, and you can receive your EIN promptly ein definition after completing the application. However, obtaining an EIN may still be beneficial as it can help protect against identity theft and enhances the professional image of the business.
- You must correct the information and identify your responsible party.
- An FEIN may also be disclosed in business-to-business engagements, business operations and financial transactions.
- By setting realistic marketing budgets, identifying tax-deductible expenses, and streamlining reconciliation and reporting processes, marketing agencies can optimize their financial management.
- Synder synchronizes transactions, allowing you to import detailed data, including tax, product, and customer information.
- To apply, international applicants must submit Form SS-4 via fax or mail and may need to call the IRS directly.
Canceling your FEIN
To apply for a tax identification number in the U.S., you must complete the forms specified by the IRS and submit them with the necessary documentation. The application process varies depending on the type of number requested. To open a business bank account in the U.S., an EIN is required. Banks use the EIN to verify the legal identity of the business and determine its tax status. It serves as a valid taxpayer identification number for business entities and functions much like a Social Security Number (SSN), but for organizations rather than individuals.
- And if you ever lose it, don’t worry, you can easily find it on past tax documents, bank records, or by calling the IRS.
- Each U.S. citizen is issued a unique Social Security number upon their birth.
- This includes corporations, limited liability companies (LLCs), trusts, and nonprofits.
- An EIN allows your business to operate legally by providing a unique identifier to handle all tax-related processes, including employee payroll and reporting taxes to the IRS.
- Every organization must have an employer identification number (EIN), even if it will not have employees.
All of our information is gathered from deep research of trusted governmental, educational sources, and first-hand experience. Any Information on this site is not guaranteed or warranted to be correct, accurate, or up to date. StateRequirement and its members and affiliates are not responsible for any losses, monetary or otherwise. StateRequirement is not affiliated with any state, QuickBooks government, or licensing body. For more information, please contact your state’s authority on insurance. Depending on how the application is submitted, applicants will receive an EIN either immediately, within a few days, or up to four weeks later.
This is because companies with these titles have different tax laws that apply to them and therefore need to be recorded correctly. If you are forming a legal entity (LLC, partnership, corporation or tax exempt organization), form your entity through your state before you apply for an EIN. If you don’t form your entity with your state first, your EIN application may be delayed.
Think of it as a Social Security number (SSN) for your business. Businesses that have employees, operate as corporations or partnerships, or file certain types of tax returns must have a FEIN. If your business undergoes significant changes such as ownership transfer, structural reorganization, or a name change, you may need to update your EIN information or apply for a new number. For instance, changing your business address does not necessitate a new number, but it should be reported to the IRS. This form requires the applicant to provide information, such as their name and address, type of entity, and number of employees.