What is an Employer Identification Number (EIN)?
Just as every individual taxpayer has a social security number that represents them, the EIN is a Tax ID number for a business.
How does a business obtain an EIN?
The IRS makes it easy to apply for online. The application process will ask you different questions such as type/structure of the business, reason for applying for the EIN, business owners and responsible parties. Once the application process is complete the EIN is given and can be used immediately.
When should someone file for an EIN number?
According to the IRS you need an EIN if you:
- Started a new business
- Hired or will hire employees, including household employees
- Opened a bank account that requires an EIN for banking purposes
- Changed the legal character or ownership of your organization (for example, you incorporate a sole proprietorship or form a partnership)
- Purchased a going business
- Created a trust
- Created a pension plan as a plan administrator
- Are a foreign person and need an EIN to comply with IRS withholding regulations
- Are a withholding agent for taxes on non-wage income paid to an alien (such as an individual, a corporation, or a partnership)
- Are a state or local agency
- Are a federal government unit or agency
- Formed a corporation
- Formed a partnership
- Administer an estate formed as a result of a person’s death
- Represent an estate that operates a business after the owner’s death.
It is important to discuss with a CPA the best choice for all of the application questions, because it impacts your taxes. If you have any questions or need help applying for your EIN, we would be more than happy to help you 770-856-1309.