Wondering how to apply for an EIN number? Want more information on why you need an employer identification number (EIN) even if you are not an employer? Looking for the fastest way to get an EIN (tax ID)? To get answers to these questions and more, keep reading for tips and explanations.
Steps for Applying for an EIN Number
- Prepare Required Information
- Name a Responsible Party
- Apply for Your EIN Number Online
- Apply for your EIN Number via Phone
- Apply for your EIN Number via Fax or Mail
- Why Do I Need an EIN (Tax ID) Number?
Depending on your situation and the location of your business or organization, you can apply for your EIN number online or via phone, fax, or the mail. Regardless of how you plan to apply, you should prepare the required information before you get started. Although the required details can vary slightly depending on the nature of your organization, you typically need the following details:
- The legal name of the entity that needs the tax ID number
- The trade name of the entity
- The name of the executor, administrator, trustee, or other responsible party
- The tax ID number of the responsible party
- The mailing address of the business
- The type of entity, such as sole proprietorship, partnership, corporation, church organization, nonprofit organization, estate, trust, etc.
- For corporations, the location where incorporation happened
- Your industry or the business’s principal activity
- The number of employees you expect to have
- An estimation of your employment tax liability for the year
- The reason you are applying for an EIN
Possible reasons for requesting an EIN include hiring new employees, getting in compliance with tax withholding regulations, doing banking, purchasing a business, creating a trust, and setting up a pension plan, but you can also write in your own reason. Note that you also need to share whether or not you have applied for an EIN in the past.
Recently, the IRS tightened the rules on responsible parties. When you submit an EIN application, you must name a responsible party. Even if you appoint a nominee to communicate with the IRS on your behalf, the responsible party still needs to sign the application.
As a general rule of thumb, the responsible party should fund the business, own its assets, and take an active role in its management, and in addition to naming a responsible party, you also need to provide their tax ID number. For instance, if you are a sole proprietor, you need to provide your Social Security Number (SSN). If you are applying for an EIN for an estate, you need the SSN of the decedent. Plan and trust administrators need their Tax Identification Numbers.
If you run multiple entities, keep in mind that you can only apply for one EIN at a time. The government only issues one EIN per individual per day. When you need multiple EINs and you are the responsible party for all the organizations, you should spread out your applications over a few days time period.
To save time, you should apply for your EIN number online. You can complete an online application in the comfort of your home or office. If you have a Wifi signal, you may even be able to do the application remotely from a coffee shop, when traveling for business, or while out in the field on business. When you apply for your EIN number online, you usually receive the number the same day. As soon as you have the number, you can start using it right away. As they say, time is money, and if you want to bring on a new employee, apply for a bank loan, or do anything else that requires an EIN, you may want to complete the process as quickly as possible online.
If you have an international business, you almost always have to apply for your Federal EIN number via phone. Again, take some time to prepare the required information and be aware that you need to name a responsible party. Once you have the info ready, simply make a call and complete the application process over the phone. Keep in mind that you usually need to do this during traditional Monday through Friday business hours, and if you reside in another country, you should think about the time difference when scheduling time for your call.
Domestic businesses also have the option to apply for your EIN number via fax or mail. Both options take longer than when you apply for your EIN number via phone. Using fax can take a minimum of four business days, while the mail takes about four weeks. Again, if you don’t provide all the required information, the process can take longer. To avoid unforeseen delays, you may want to work with a professional service that helps businesses and organizations get tax ID numbers.
EIN stands for employer identification number, and if you own a business or a nonprofit and you plan to hire someone, you need this number. Without an EIN, you cannot fill out payroll forms or submit payroll taxes such as Social Security contributions, Medicare premiums, or withheld payroll taxes. Due to that fact, many people who aren’t employers wonder, “Why do I need an EIN (tax ID) number?” Well, the fact is that these numbers aren’t just for employers. These unique numbers identify your entity to the government for a variety of purposes.
Trusts, nonprofit organizations, estates, partnerships, farmers cooperatives, and a variety of other organizations use these numbers on government correspondence, such as sales and excise tax returns, corporate income tax returns, and other forms required by the Internal Revenue Service (IRS). On top of that, banks and credit card providers may require an EIN if you want to open an account or take out a loan on behalf of your organization.