Whether you’re just starting your restaurant business or expanding from a solo sole proprietorship, it may be time to get an EIN Number. A Tax ID (EIN) Number will be necessary for quite a few business-related documents, and it’s fairly easy to get.
Steps to Obtaining a Tax ID (EIN) Number for your Restaurant
- What is a Tax ID (EIN) Number?
- Why Does a Restaurant Need a Tax ID (EIN) Number?
- How to Get a Tax ID (EIN) Number for a Restaurant Online
- How to Get a Tax ID (EIN) Number for a Restaurant through Mail or Fax
- Is an EIN Number the Same as a Tax ID?
- How Long Does It Take to Get a Tax ID (EIN) Number for a Restaurant Business?
A Federal Tax ID Number (FTIN) or Employer Identification Number (EIN) is a nine-digit number that’s used to identify you to the federal government. But, in addition to that, it’s also used by banks, local governments, and other businesses. Much like a social security number, your EIN Number is a unique signifier for your business. It will be used on documents, tax payments, licenses, and permits.
For a restaurant, you’re going to need an EIN Number for many of your most critical tasks.
Some businesses, such as sole proprietorships, don’t necessarily need an EIN Number. But a restaurant always will, unless it has no employees at all. A restaurant needs an EIN Number to:
- Hire employees. Even hiring a single employee is enough to require that a restaurant have an Employer Identification Number, though “individual contractors” do not count as employees.
- Lease out a restaurant space. Restaurant spaces are either leased directly to businesses or personally guaranteed. If you want to lease a restaurant as a business, you need an identification number.
- Lease and finance equipment. Often, restaurants lease or finance their equipment rather than purchasing it outright. Business-related loans and equipment-related loans have to be conducted as a business, usually through an EIN.
- Acquire business capital. EIN Numbers are used as a form of social security number, to track a company’s credit. When acquiring business loans, an EIN Number is going to be necessary to determine the creditworthiness of your business.
- Get a merchant processing account. Most restaurants need to be able to process credit card payments, and processing credit card payments isn’t possible without a merchant processing account. Merchant card processors need an EIN Number for all their applications.
- Acquire licenses and permits. Many food permits, alcohol permits, and other types of restaurant licenses are going to request an EIN Number, to identify the business.
- Open retirement accounts. To properly associate a retirement account with an employer and an employee, you will need an EIN. 401ks require an EIN to open, as they are employer-linked retirement accounts.
- Pay taxes. To pay your federal taxes, you will need an EIN Number. While a sole proprietor can sometimes file taxes under their social security number, a restaurant may have a different business structure.
These are only a few of the tasks that an EIN Number will facilitate. For a restaurant, you should acquire a Tax ID Number soon after opening, or you could find yourself without even a business credit card.
It’s easy to get an EIN number online. Through an online application process, you’ll furnish some basic information about your restaurant, yourself, and why you need an EIN Number now (usually the formation of a new business).
You’ll receive an EIN Number in an hour and be able to immediately use it for your documents, forms, and permits. Often, you’ll need to request an EIN Number on a time crunch; you may be trying to open a business account, secure funding, or hire a new employee. Applying online makes the process fast and convenient.
If you don’t need your EIN Number right away, you can opt to acquire it through mail or fax. The process is similar for both: you will fill out and sign a paper application, which will request the business owner’s information, as well as the company’s information, and the reason for requesting an EIN Number. Once the paperwork has been completed, you can mail it or fax it.
Processing mailed-in paperwork will usually take about four to six weeks, while processing faxed in paperwork will take three to five days. Either way, it’s a lengthier process than the online EIN application.
An EIN Number is the same as a Federal Tax ID Number. The same number is often referenced differently depending on the role that it’s playing. If you’re using your identification number to hire employees, open retirement accounts, or pay payroll taxes, it will be called an Employer Identification Number. If you’re using the number to open bank accounts or pay federal taxes, it will be called a Federal Tax ID Number.
Despite the two different names, it’s the same nine-digit number.
It should be noted that “Tax ID” can also refer to a State Tax ID or a Local Tax ID, both of which will be different. You may need to ask for clarification if being requested a “Tax ID” by a local agency.
It doesn’t take long at all to get an EIN Number for a restaurant business. In fact, you can get an EIN Number within an hour if you go through an online tax ID service. As long as you have your business documentation in hand, you should be able to get an EIN Number quickly.
However, if you apply via mail or fax, you may be waiting a little longer. The mail application process takes up to six weeks, while the fax application process takes up to five days. If you need your EIN Number immediately, you should use the online EIN application.
Starting a restaurant business requires a lot of paperwork, but getting your Tax ID Number is one of the simplest tasks you’ll need to complete. You can get started immediately by contacting a tax ID service with your company information.