Does a partnership have to have an EIN number? Generally, the answer is yes. If you’re starting a partnership, you need an Employer Identification Number (EIN) to handle a range of tasks for your business, and without an EIN, you will face a lot of unnecessary hurdles and time delays. To learn more about how to apply for a partnership tax ID (EIN) number online or through other venues, keep reading. Here’s a look at the most important information to help you through the application process.
Steps for Applying for a Partnership Tax ID (EIN) Number
- Prepare Business Owner Information
- Apply for a Partnership Tax ID (EIN) Number Online
- Apply for a Partnership Tax ID (EIN) Number by Phone, Mail or Fax
- Does a Partnership Have to Have an EIN Number?
- If My Business Is Classified as a Partnership, Do We Need Separate Tax IDs?
- How Do I Get an EIN Number for a Partnership?
To get an EIN, you need to supply some information about yourself and your partnership. To ensure the application process goes as quickly and smoothly as possible, take some time to prepare business owner information before you get started. Luckily, you don’t have to provide a lot of details, but you need your legal name, mailing address, and a personal tax ID such as a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or existing Employer Identification Number (EIN).
On top of that, you need to know your business’s structure – in this case, you’re a partnership. You should know why you are applying. For instance, common application reasons are starting a new business, hiring employees or handling banking needs. You also need to note your industry on the form.
Finally, take some time to estimate your partnership’s employment tax obligations for the year. As of 2018, if you anticipate paying out $4,000 or more in total wages for the year, you need to file Form 941 quarterly, but if you are under that threshold, you can make an election when you request your EIN so that you can avoid that extra paperwork.
The fastest and easiest way to get an EIN for your partnership is to apply for a partnership tax ID (EIN) number online. When you apply online, you can enter all your information from the comfort of your home or the convenience of your office or worksite. You get a response much faster, and in most cases, you can get your EIN the same day that you apply. Then, you can start using the number on forms and documents immediately.
If you don’t want the ease and speed of applying online, you can apply for a partnership tax ID (EIN) number by phone, mail or fax. International applicants must apply over the phone, and unfortunately, if you are a U.S. resident and your partnership is based in the United States, you can’t apply over the phone.
However, you can apply using a fax machine. Simply fill out the application, fax it in, and include your return fax number. If you provide all the details correctly, you should receive your partnership’s EIN over fax within about four business days. Similarly, you can also apply through the mail, and if everything goes well, you should have your number within four weeks. Note that mistakes and missing information can increase the timeline in both of these situations.
Partnerships need an EIN for many different tasks. This number identifies your partnership to the government, and essentially, any time you need to submit information to the government about your partnership, you have to note your EIN on the information. In particular, you need an EIN if you have employees, if you withhold taxes on income paid to non-resident aliens, and if you offer a Keogh plan to your employees.
You also need an EIN if you file employment, sales, excise, alcohol, tobacco and firearms tax returns. In a lot of cases, banks also require you to have an EIN if you want to open an account or take out a loan in your business’s name. Even if you don’t have employees, you may need an EIN to set up an Independent Retirement Account (IRA) for yourself, through your partnership.
Here’s another popular question a lot of people ask – if my business is classified as a partnership, do we need separate tax IDs? The answer is a bit nuanced, and you may want to check with a business professional. However, in most cases, the partnership itself just needs a single tax ID. Again, as explained above, you can use that tax ID on tax forms for your employees as well as for other federal tax forms. Depending on the laws in your state, your partnership may need a separate tax ID for state tax forms and documents.
However, you usually don’t need to get a new tax ID for each of the partners. In most cases, you should already have a personal tax ID. For example, if you’re a citizen or a legal permanent resident, you should have a Social Security Number, and if you’re a foreign national, you may have an ITIN. When you report your share of earnings and expenses from your partnership on your personal income tax return, you pair that information with your personal SSN, ITIN or other tax ID. You don’t use your EIN on those forms. Instead, you use your EIN on forms expressly related to your company.
Still wondering, “How do I get an EIN number for a partnership?” First, you need to prepare business owner information. If you’re international, you need to start the application process over the phone. In all other cases, you should decide if you want to apply online, through the mail or over fax. Applying online is always the best option if you want your number quickly, but beyond the speed, this tax ID application method is also the easiest.