IRS EIN Application – Eligibility, Who required it and How to get one?

An employer identification number (EIN) is a special number that is given to an entity so that the Internal Revenue Service (IRS) can quickly identify it. Employers frequently utilize EINs to report taxes. 

IRS EIN Application

A distinct nine-digit number given to a company is called an employer identification number. The IRS can quickly identify firms for tax reporting purposes thanks to EINs. Before they may open for business, all companies that satisfy specific requirements need to get an EIN.

These may be applied for on the IRS website, and doing so is free. EINs are required for businesses to file taxes as well as to open bank accounts and submit credit applications.

In the same manner that Social Security Numbers (SSNs) are used to identify individual citizens of the United States, Employer Identification Numbers are also provided to identify business enterprises. The Federal Tax Identification Number (FEIN) is another name for the EIN.

EINs, as previously mentioned, are distinct nine-digit numbers with the format XX-XXXXXXX. Information regarding the state in which the corporation is registered is included in EINs, which are issued by the IRS. The organization identifies taxpayers who must file different business tax filings using EINs.

IRS EIN Application Process 

To get an EIN, an individual will have to go through the procedure below.

  • Navigate to the official website of IRS which is accessible at https://www.irs.gov/.
  • Applicants must find the Form SS-4 on the web page and hit apply online.
  • Here you need to add all the requested information such as name, organization name, business type, date and much more.
  • Candidates need to check all the information again in order to check the reliability of their details.
  • In order to apply for an EIN online, a firm has to be based in the United States or its territories. 
  • An EIN is issued right away following the validation of the online data.

Eligibility for Applying IRS EIN 

The following requirements must be satisfied to apply for an employment identification number:

  • The United States or its territories must be the location of your primary business.
  • A valid taxpayer identification number, such as a Social Security number, is required for the applicant.
  • It is not necessary for the applicant to be the owner of the company. The candidate may be an officer or partner in the business. Any “responsible party” defined by the IRS as someone who oversees the company’s finances may apply. 
  • An additional person, such a secretary or assistant, may also apply as long as a responsible party fills out the third-party designee section on Form SS-4 and signs it.

IRS EIN Application

Which companies require an IRS EIN?

Every LLC and corporation that you run has to have its own EIN. If any of the following apply to your company, you need an EIN:

  • It has workers and is run as a company or partnership. 
  • It has a Keough plan and files employment, excise, or alcohol, tobacco, and firearms taxes. 
  • It deducts taxes from a non-resident alien’s income (except from wages). 
  • It has to do with non-profits, farmers’ cooperatives, trusts, estates, REMICs, or plan administrators. 

An EIN is not necessary for a sole proprietorship or a single member LLC that is taxed as a disregarded business unless it is required due to one of the previously mentioned qualifying factors (e.g., it has employees, submits employment or excise taxes, etc.). 

Why obtaining an employment identification number is important? 

Obtaining an EIN is necessary for many small businesses in order to file taxes. To pay and file payroll taxes for its employees, each firm with employees must obtain an EIN. 

The ability to submit a business income tax return also necessitates the possession of an employment identification number for companies, partnerships, and multi-member LLCs.

An EIN is also necessary for a few distinct kinds of organizational structures. Regardless of whether you employ people or not, you must register for an EIN if your company fits any of the above mentioned categories. 

Where is an EIN used in businesses?

Employers are not supposed to use their Employer Identification Numbers for any other reason than tax management.  Significant company operations need the use of an EIN, such as:

  • Establishing bank accounts.
  • Keeping track of business documents, such as invoices, which let a business pay suppliers and chase debts.
  • Hiring staff members.
  • Honoring tax laws and making tax payments.

Although some states additionally require a firm to file for a state-level Tax Identification Number, the IRS uses the EIN for federal tax reporting.

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