Any company that has workers is expected to have an Employer ID number (EIN), but you may need an EIN even if you have no employees, at least when you start your business. Effectively it is the Social Security number of your company. The word “Employer ID Number” is something of a misnomer because it is often found that even companies without workers need one.
You might want to think about getting an EIN just to be on the safe side — it’s going to be there if you’re ever asked to provide one. It costs nothing so why not make your time a small investment?
What’s an Employer Identification Number?
An EIN is a number issued to classify a company for tax purposes by the Internal Revenue Service. You must include the tax ID on applications for bank accounts, income tax forms, and employment tax reports and payments for your company.
A corporate tax Identification has the same functions as an individual’s Social Security number.
What makes an Employer ID Number different from a TaxPayer ID Number?
The words “EIN,” “employer ID,” “tax ID,” and “taxpayer ID” are broadly thrown around, but actually there are distinct differences between these concepts. The IRS has meanings which are precise.
The general term is “taxpayer registration,” which could be one of the different numbers. The employer ID is a corporate taxpayer ID, whereas a Social Security number is an employee taxpayer ID. The “Personal Taxpayer ID” is another form of tax Identification. This is used for people who do not have a Social Security number.
Do you need a Business ID number for your business?
When you have employees, or you file certain types of taxes, your business will need an EIN. If your business is taxed as a corporation or partnership, it will need one too.
If your company is a sole proprietorship — you are not registered with your state as an LLC, a corporation, or a partnership — you may not need an EIN for tax purposes, and you have no employees. In this scenario your Social Security Number is your EIN.
But when you start your business you might need an EIN and apply for a checking account. If you are applying for a business license, you might need one too.
How do I complete the Employer Identification Number application form using SS-4 form?
Please use IRS Form SS-4 to register for an EIN. Go to the IRS website and print the form, first answer the questions even if you intend to apply online.
IRS Form SS-4 is IRS-free, and can be completed online or by phone. You don’t really have to pay for an online service to help you complete it, and most of this “assistance” is highly priced, and could even be a scam.
The application asks a series of questions about your company, such as whether you have employees or will have them, and when the fiscal year or financial year ends. One of the frustrating parts for single-member LLCs is how you want the LLC to be categorized.
The online application process takes just a few minutes, and you will receive your EIN immediately upon completion and submission of the application. During its service hours, go to the “EIN Assistant” page on the IRS website.
Since 2012, the IRS has limited the submission of Form SS-4 to one per day, and this rule covers all submissions, whether made online, by fax, or by mail from the US.
When do you need a new Employer ID Number?
Simple changes to your company typically do not require a new EIN, but if you change your legal business structure, such as from a corporation to another organization or from a sole proprietorship to a corporation, you might need a new one. If your company changes you will contact the IRS, and the IRS will inform you if you need a new EIN.
If you made a mistake in your EIN application or if you sent the wrong person as the responsible party in item 3 on the form, send a letter of request for correction to the correct IRS site.
When you simply change your business name or address you don’t need a new EIN.
To tax-exempt entities special rules apply. The IRS recommends making sure that the business structure of your organization is firmly nailed down before you apply for an EIN.
This is because if you make such errors within 3 years, such as failing to file a return, you will lose your tax-exempt status. The calendar starts with the day you get your EIN.
Your EIN cannot be renewed
The EIN is your period of … ONE. It’s like your fingerprint, tax / legal. If your company ceases to work it will not eventually end up with another business. It is not going to expire. It’s gone forever, when you’re done with it.