EIN NUMBER

How to Get an EIN Number for a Business

A lot like Social Security number for individual tax payers, the Employer Identification Number, also referred to as the Federal Tax Identification number, is the Internal Revenue Service’s way to identify your company.

As a business owner, your EIN number has plenty of benefits. For example, it lets you conduct activities regarding your business, things that would otherwise need your Social Security.

If you need help getting an EIN number for your business, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

What Do You Need an EIN Typically For?

Business owners use the EIN for filing taxes, but other than that the EIN can be used for:

Opening a bank account for the business

Apply for business permits

Applying for a credit card

Other reasons for a business owner to get an EIN would be for privacy. For instance, if you are contractor and work with a lot of clients, it is very easy for your Social Security number to be used for identity theft. But if you use an EIN, this cuts down your chances of being victimized to the crime.

Who Should Get an EIN?

The IRS states that on top of filing taxes for your organization, you need an EIN if:

You hire employees

Your business is a partnership or a corporation

You withhold income taxes paid to non resident alien

You work with a Keogh Plan

You are involved with organizations that are listed with the IRS

The Internal Revenue Service also has a list of the kind of organizations that require an EIN

Corporations

All corporations and S corporations require an EIN to operate.

Partnerships

All limited and general partnerships require that you provide them with an EIN.

Sole Proprietorships

Sole proprietors without any employees but who do plan on hiring employees don’t need to apply for an EIN. They can make use of their Social Security number for all Federal Tax related activities and purposes. Note that your Social Security number will not be required for public documents. However you must remember that some banks that you do business with make it mandatory that you have an EIN for your business.

Sole proprietorship with employees needs EIN for their business no matter what.

LLC

One member LLC’s usually get by with only the Social Security number for all IRS related activities. If you have an LLC that hires employees, and if you multiple members, it is important that you apply for an EIN.

Multiple Member LLC’s need an EIN from the IRS, it does not matter whether they plan on hiring employees or not.

Single Member LLC’s that do not have any employees do not need to apply for an EIN. Their Social Security number will work just fine for all Federal Tax purposes. However it is possible that certain financial institutions and lenders that you do business with require that you have an EIN instead of a Social Security Number. You can apply for an EIN any time you wish. It can make your business with banks a lot easier and separates your business and personal finances from each other.

If you are converting a business that you started as a sole proprietor into an LLC, then you can use the EIN that you used for your sole proprietorship, only if your LLC too does not hire any employees.

Single Member LLC’s who hire employees or will do so in the upcoming next 12 months will need to apply for the EIN. In this case it is the IRS that gives you two separate EIN’s, one number is for you, and the other is for the business. Both of these have important purposes. The employment taxes that you pay are to be reported under the LLC EIN, and your EIN is used to report the money paid by the LLC to the member.

An LLC that Chooses to be taxed as a Corporation will also need an EIN.

If you need help getting an EIN number for your business, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

Why It Is a Good Idea to Get an EIN Even When You Do Not Need It

There are mainly two reasons why you should apply for an EIN if you don’t have it because your business does not need it.

Reduce the Risk of Identity Theft

In this day and age the theft of tax payers identities has become a persistent problem. Identity thieves steal Social Security numbers and then use them for filing tax returns and therefore fraudulently receive tax returns, under your name. The wisest thing to do is always keep your Social Security as private as you can. If you provide personal services as an independent contractor, it is important that you provide your Social Security to the clients, otherwise the client can holdback 28% of the payments legally. When you have an EIN you do not have to worry about sharing your Social Security number, you can give your clients the EIN instead.

An EIN Can Help You Build a Contractor Status

By using EIN on payments and tax returns you can easily show that you are an independent businessperson, in other words it means that you don’t work as an employee, and that makes you more credible and attractive to prospective clients of your business.

How to Get an EIN?

Apply For It Online

Through the IRS’s official site you can easily apply for the EIN. Once its application is complete, all the details are validated through the online session where the EIN is issued instantly. This online application system is available for all who have principal businesses, legal residence, or office in the United States or in the United States territories. The principal officer, general partner, grantor, owner, or trustee

needs a legit Taxpayer Identification Number (TIN). Your individual TIN, Social Security number, and Employer Identification Number, all can serve in its place, and can be used in the application process.

Apply Through Fax

Taxpayers can always fax completed SS4 applications to the right fax number with the Internal Revenue Service. Before submitting the form, make sure that it has all the required details. It is through this processing that the IRS will determine if the entity really needs a new EIN, and if it does one will be assigned to it. It is very much convenient if the applicant sends in their own fax number, with that the EIN is issued in no more than four working days, if not it can take as much as two weeks to get your business’s EIN.

Apply through Mail

The standard time frame for processing an EIN application from the start is a month. This is why the IRS continuously urges that the applicants send in all the necessary information so as not to delay the process. The processing period here takes into account checking whether you need an EIN, before working towards issuing one. For this you will have to mail the SS4 form available with the IRS.

International Applicants Can Apply Through Phone

An international applicant can always call the Internal Revenue Service on weekdays and obtain the EIN for their business. The person who is making the call must be authorized to receive the EIN and be able to answer all questions that concern the SS4 form. In this application form it is important that you complete the Third Party Designee section. You must only do this if you want to authorize a named individual to get the organization’s EIN, and also be the one to answer questions regarding the SS4 form. The authority of the designee is terminated when the EIN is released to said designee, upon their valid signature.

Answering the Questions that Get You the EIN

Applicants for the EIN are presented with five questions during the procedure. The first question requires that you choose the type of EIN you need for the type of your business. Remember that EIN’s apply to LLC, estate, partnership, and sole proprietorship. This is really simple; you have to pick the option that you believe describes everything that you are looking to gain from the EIN. You might be working to build a new business, need the EIN for a certain bank you deal with etc. The online questionnaire that you must fill requests that you input your Social Security number before finishing the application.

Saving the Document with EIN

When you have completed all of the parts of your application, the system generates a new EIN for you which you can start using immediately. An official IRS document then loads on your computer, and this is the confirmation that you application was a success. You are then assigned your EIN. A wise move would be to save one copy and print another for your own records just in case you need it while you are around either of those two places.

Remember once you finalize the application and you receive your EIN, you can never have the number you have been issued cancelled. On the other hand, in case you discover that you do not really need an EIN after all, you can request the Internal Revenue Service to close your business account. Remember that your EIN is never cancelled, and is still available to the business owners because the IRS never reassigns a number that has been issued once. You can open the account by requesting it to the IRS any time you want.

If you need help getting an EIN number for your business, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

How Long Does It Take to Get an EIN?

It is important that you apply for an EIN early on so that when the need to file a deposit or a tax return arrives, you would have already received your EIN. To save time, it is easier that you apply for it online. The IRS states that you must send your completed form, which is the SS4 around four to five weeks prior to when you need to file a tax return, or need the EIN for a deposit you have to make.

After you have applied for your EIN you can always check its status online on the official IRS website. If you do not have your EIN in time, you can send payment to the service center for your state. Remember to have your check payable to the IRS. Also make sure that you show your name, address, tax, period covered, and the date that you applied the EIN for.

Instead of Applying for One You Can Always Used Your Previous EIN

There are certain conditions that allow you to use your old EIN for a new business, particularly a partnership or a Limited Liability. Reusing an EIN would need that you list the number of cases it can be reused and that you properly inform the Internal Revenue Service about the new business.

The IRS states that a business does not need a new EIN if it only changes the name of a business, forms a new partnership, convert a business into an LLC, or that it simply adds more locations to an existing business. The rules on this are not that complicated, you can simply consult the official IRS site to check this.

You can inform the IRS about the new business name you have. You must write to the same address where you file your returns if you are a sole proprietor. A representative of the business then signs a letter and includes your EIN on the letter. You can then fill out the form 1065 of the current year, and mark it as a ‘name change’ on the first page on line G in the third box. You must also write a letter to the Internal Revenue Service informing them about this particular change. As a partnership, one partner should also sign this form.

If you are a corporation you will need Form 1120. You have to mark the box 3 on line E on the first page. Fill the 1120S form, and here you have to mark box 2 on line H on the first page, if you operate as an S corporation. In case you already filed a return in April, you can contact the IRS officially through a letter via the agency with which you filed the tax return and tell them about the new business and your preference to use the same EIN. You must remember to include that EIN and have a corporate office sign the letter.

If you are an LLC that is working as a sole proprietorship you must write to the Internal Revenue Service through the agency you filed your taxes with. It is important that you follow the procedure as a sole proprietor described in the first step if you have already filed your taxes for this year. If you happen to be an LLC working as a partnership you can fill out the 1065 form and mark the third box on line G on the first page. In addition to this, you must also mark appropriate boxes on the second page’s Schedule B, and choose between making line C for the Domestic Limited Liability Company, or Line D, which is for the Domestic Limited Liability Partnership. You must send a letter to the Internal Revenue Service in case you filed your taxes for the year in April, here you must also include old EIN, and take the signatures from a partner in your organization.

How to Locate an Existing EIN?

If you are searching for your companies EIN, you should know that it was probably sent over through mail or online. If you have lost your EIN you can put in a request with the IRS for a new one. There are a few ways you can locate the EIN.

Through the employees W2

If the company is publicly trade,d you can find it online

Through the governments, if it is listed with court room documents, for bankruptcy proceedings for example

Requesting it through the business’s payroll division

How to Verify an EIN?

You must first determine if an entity is tax exempt, or a purely for profit organization. The official IRS page has a Search for Charities page that lets you fill in the information about the employer of an organization. If you are an employer and trying to verify the number for yourself, you can save time and call the Internal Revenue Service yourself. When applying for the EIN if you were listed as the authorized contact, the number will be dictated to you over the call then and there.

You can also search for an EIN with a tax advisor. Most of these services are reliant on paying a fee. You are supposed to provide an EIN and the service provides you details of the employer. There are plenty of online services that do this as well.

If you need help getting an EIN number for your business, please call us at 407-344-1012, or email us at info@freedomtaxfl.com.

 

 

Please follow and like us:

Post a Comment

Your email is kept private. Required fields are marked *

Enjoy this blog? Please spread the word :)