How to Get a Federal Tax Identification Number

What you’ll discover:

Do I need an employer identification number (EIN) for my company?
Should I acquire an EIN for my company even if it’s not required?
How can I get a federal tax identification number?

Whether you work for yourself or run a firm with a payroll, the Internal Revenue Service (IRS) assigns a unique code to your business operations. If you’re a freelancer or contractor, your Social Security Number (SSN) may suffice. Nonetheless, you’ll need to file for an Employer Identification Number (EIN) after you hire your first employee for a variety of reasons, and it may be beneficial in certain circumstances even if it’s not necessary.

Do I need an employer identification number (EIN) for my company?

Most companies have EINs, however they are not required for all enterprises. If you intend to recruit workers, you’ll always need an EIN, but if you’re operating on your own, you may be able to get away without one. If you begin as a sole proprietorship and later incorporate, you will need to get an EIN.

According to the IRS, an EIN is required if you:

Employ nonresident foreigners or withhold taxes on their earnings.
Request a new charter from your state’s secretary of state.
Decide to modify the name of your company (such as incorporating your sole proprietorship).
Form your company by a statutory merger.
Fill out tax forms for employment, excise tax, and alcohol, tobacco, and guns.

But, in general, whether you have an LLC, partnership, or corporation, you will need to get an employer tax ID number. If you prefer to be regarded as an S-Corporation and fulfill your state’s standards for a closed company, you may be able to circumvent the identification procedure in certain situations. But, such instances are few, and it is better not to depend on them.

Even sole proprietors (self-employed persons operating on their own) may need EINs in certain cases. If you are self-employed, you will need an EIN if you do any of the following:

Participate in bankruptcy procedures. It enables the government and your lending institution to monitor the operation and service the appropriate accounts.
Form a collaboration with someone else. This is true even if that individual does not want to actively engage in the company.
Acquire or inherit a pre-existing company. This is not the case if you just alter your company’s name or location.

Should I acquire an EIN for my company even if it’s not required?

There are reasons for sole proprietors to get EINs, even though the IRS does not mandate them to do so. Most crucially, you may provide your EIN rather than your SSN to customers who need it to complete tax forms. EINs are far less vulnerable to identity theft than Social Security Numbers. It’s also an excellent strategy to keep your personal funds separate from your company finances in general.

Additional benefits of obtaining an EIN (rather to utilizing your actual SSN), even if not specifically required by law, include:

The validity of supplying customers with a company name and EIN (as opposed to your legal name and SSN).
Improved chances of establishing company credit and obtaining a business loan (banks often require applicants to have an EIN to open up a bank account).
The capacity to recruit personnel rapidly if and when the demand arises.

How can I get a federal tax identification number?

If you need an EIN or have determined that it is in your best interests to get one, the good news is that it is simple and fast. Although you can fill out IRS Form SS-4 and mail it (10-14 days), it’s significantly faster (approximately 15 minutes) to do it online utilizing the IRS’s EIN Assistant.

Plan to finish the full application in one sitting. If you do not interact with the online assistant for more than 15 minutes, it will reset and no of your information will be kept. Similarly, if your machine crashes during the procedure, you will have to restart. You will get your number as soon as you complete and submit the application.

The IRS will send you a printed copy, but you should seek an extra confirmation letter as verification that you applied for your federal tax ID number. The confirmation letter will be sent in PDF format, therefore if you do not already have one, you will need to download Adobe Acrobat Reader or another PDF reader.