An employer identification number (EIN) is a series of digits used to identify a business in the United States. Also called a federal tax identification number, it is granted to a business by the Internal Revenue Service. It can be used for a variety of purposes, with the most important one being the filing of tax returns. It is also used for opening business accounts and applying for business licensing.
Not all businesses need an EIN. A business needs one if it has employees or is classified as a corporation or partnership. An EIN is also required if a business has to file an employment or excise tax return. Businesses that file alcohol, tobacco, and firearms tax returns need these numbers as well.
An employer identification number is also required for a business that withholds taxes on income that is paid to non-resident aliens. This excludes regular wages, however. Businesses that have Keogh plans and involvement in certain trusts, IRAs, non-profits, farmers' cooperatives, and real estate mortgage investment conduits need EINs as well.
Applying for an employer identification number is pretty easy to do, and it's free. Businesses can apply online through the Internal Revenue Service website. After completing an online application, a business is issued an employer identification number right away online. Any business operating legally in the United States or in a U.S territory is eligible to apply for the number online.
A business can also apply for an employer identification number by phone. The IRS accepts phone applications at (800) 829-4933. This application method also results in the immediate receipt of an EIN. The line is available for phoned-in applications on business days from 7AM to 10 PM.
A business can also obtain an EIN through a faxed-in or mailed-in application. To obtain the number via fax, a business has to find its state-specific fax number via the IRS website and fax Form SS-4 to the appropriate number. EIN numbers can be faxed back to the company's fax number in about four days.
A business can mail in an employer identification number application using Form SS-4. This form includes the addresses for mailing applications to the appropriate office. Generally, it takes about four weeks to get an EIN number via the mail.
If a business changes ownership or begins operating under a different type of business structure, it will need a new employer identification number. However, there are many circumstances under which businesses do not have to apply for new numbers, such as if a sole proprietorship changes its name. A company will need one, however, if it incorporates. Likewise, corporations do need new numbers if they restructure and become sole proprietorships or partnerships.