It is also referred to as a Federal Tax Identification Number (TIN). Similar to an individual's Social Security Number (SSN), an EIN is used to identify a business entity for various tax-related activities.
How-to Guide for Obtaining an EIN:
Determine Eligibility: Confirm whether you are eligible to apply for an EIN. Generally, businesses, including sole proprietors, partnerships, corporations, and limited liability companies (LLCs), are eligible. Non-profit organizations, estates, trusts, and certain other entities may also require an EIN.
Understand the Purpose: Familiarize yourself with the purposes for which you will need an EIN. These can include opening a business bank account, filing tax returns, hiring employees, applying for business permits, and fulfilling other tax-related obligations.
Complete the Application: Access the online EIN application on the IRS website. Alternatively, you can apply by mail or fax using Form SS-4. Provide accurate and complete information about your business, such as its legal name, mailing address, type of entity, and ownership structure.
Determine Responsible Party: Identify the "responsible party" for your business. This is an individual who has control or authority over the entity's funds and assets. The responsible party's name, Social Security Number (SSN), and contact information must be provided on the application.
Submit the Application: Once you have completed the application, submit it electronically, or mail/fax it to the appropriate IRS address. Ensure that all required fields are properly filled out to avoid delays in processing.
Receive the EIN: Upon successful application, the IRS will assign you an EIN immediately if you apply online. If you applied by mail or fax, it may take several weeks to receive your EIN. You will receive an official notification letter containing your assigned EIN.
Keep a Record: Keep a copy of the EIN notification letter in your business records. This letter serves as proof of your EIN and should be provided when required for various business transactions.