What is An EIN and Why Is It Important? U S. Small Business Administration

This is a free service offered by the Internal Revenue Service and you can get your EIN immediately. You must check with your state to make sure you need a state number or charter. To ensure fair and equitable treatment for all taxpayers, Employer Identification Number (EIN) issuance is limited to one per responsible party per day.

• Corporations and partnerships are required to have an EIN for tax administration purposes.
• Using your business’s EIN instead of your personal SSN or ITIN provides additional evidence that you’re a contractor and not an employee.
• If you incorporate your business, employ workers, or establish an LLC, you will need an IRS-issued FEIN for your company.
• He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance.
• Only individuals with taxpayer identification numbers can apply for an EIN as the responsible party.
• Processing times may vary and are noted on the search page for every filing type.

How sole proprietors and single-member LLCs can get an EIN

In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press. We believe everyone should be able to make financial decisions with confidence. LegalZoom provides access to independent attorneys and self-service tools. LegalZoom is not a law firm and does not provide legal advice, except where authorized through its subsidiary law firm LZ Legal Services, LLC.

Is your EIN the same as your SSN?

For independent contractors, freelancers, and entrepreneurs operating small businesses from their residences, obtaining an EIN may not be obligatory but can still offer valuable benefits. Beyond its legal necessity, an EIN offers several advantages that can significantly impact your business’s success. From simplifying tax management to facilitating financial transactions and enhancing credibility with clients and financial institutions, acquiring an EIN is a powerful tool for any aspiring business owner.

Obtaining Licenses and Permits

You can also check business documents such as tax returns to find your EIN printed there. An EIN is a specific type of Tax Identification Number (TIN), with other TINs such as Social Security Numbers (SSN) and Individual Taxpayer Identification Numbers (ITIN) also existing. While all these numbers serve the purpose of identifying taxpayers for tax administration purposes, they are used for different types of taxpayers and situations. The online application is the most expedient way to obtain an EIN, with immediate issuance upon completion.

Applying Online

In summary, while all EINs are a type of TIN, not all TINs are EINs. Each serves a critical function in tax and identity documentation for different groups of taxpayers, and knowing which type of number to use is essential for compliance and proper management of financial obligations. If your business isn’t incorporated in the United States, you can’t apply for an EIN. On the other hand, if it is, but you’re the one who doesn’t have a legal residence in the US, you can apply for a free EIN via telephone, fax, or mail. The simplest way to apply for your EIN is online via the IRS EIN Assistant. As soon as your application is complete and validated, you’ll be issued an EIN.

• Let’s discuss the various application methods and the requisite information for each.
• By supplying this information, businesses can ensure they meet all the requirements for obtaining an EIN and remain in compliance with tax regulations.
• When you apply online, the IRS will validate your information, and your EIN will be issued immediately.
• You may also need an EIN to apply for business licenses or a sales tax permit.
• If you operate multiple businesses, each must apply for and use a separate EIN.
• An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to keep track of a business’s tax reporting.

The IRS also accepts paper mail applications, though it quotes an expected turnaround time of four to five weeks. Businesses that change their ownership structure usually must apply for what is the purpose of an ein number a new EIN. For example, sole proprietors who plan to incorporate their businesses must apply for a new EIN. A. Generally, you will receive your EIN immediately when applying online.

However, non-employers are also required to obtain one if they operate as a corporation or partnership. The person responsible for the business, regardless of their title within the company, must be an individual and not an entity, unless it’s a government entity. Applications can be made by phone https://www.bookstime.com/ (for those who aren’t in the United States but will do business in the country), fax, mail, or online. Employer identification numbers are issued to identify business entities in the United States the same way Social Security Numbers (SSNs) are used to identify individual residents of the country.

Tax Administration