Do you run a sole proprietorship? Are you getting ready to hire your first employee? Then, you need an employer identification number (EIN). Are you forming a corporation, a partnership, or a limited liability company? If so, you also need an EIN. Estates, trusts, and nonprofits always need an EIN. This number identifies your organization to the government on tax forms as well as other documents, and you often need an EIN for banking purposes. Wondering how to get an EIN? Then, keep reading. Here is an overview of how to apply for an EIN number online, over the phone, with a fax machine, and through the mail, as well as a brief look at how to use these numbers.
Step-by-step guide to getting an EIN :
- Prepare Business Owner Information
- Apply for an EIN Number Online
- Apply for an EIN Number by Phone, Mail or Fax
- Why Do I Need to Obtain an IRS EIN Number?
- How Do I Get an EIN Number?
- What is the Difference Between an FEIN Number and an EIN?
To streamline the EIN application process, start by taking some time to prepare business owner information. If you’re submitting an application for a trust, an estate, a nonprofit, a church group, or another non-business entity, you need the information related to those organizations as well.
The application requires basic details about your organization such as name, mailing address, type of organization, and details on the business owner or responsible party. Take some time to think about your employees or the employees you plan to hire. The application requests an estimate of the number of household, agricultural, and general employees you plan to hire. It also requires information on whether or not you expect to withhold $1,000 or more in payroll taxes for your employees.
On top of providing those details, you also need to note your entity’s structure and tick a box explaining why you are applying for an EIN. The most common reasons to apply for an EIN are covered below, and in some cases, you may apply for an EIN for a few different reasons.
If you need your official EIN number as quickly as possible, you should apply for an EIN number online. With the online application process, you usually obtain your number as soon as you submit the application – typically within one hour. Note, however, there can be delays if you don’t prepare business owner information in advance and fail to submit the right information. Professional assistance is available.
Want to apply for an EIN number by phone, mail or fax? You can only apply over the phone if your business was formed in another country. To apply over the phone, you need to call during daytime hours when government offices are open. Then, you answer a number of questions, and the representative processes your application for you. The time involved can vary.
If your business or other entity was formed in the United States, you can apply for an EIN over fax or through the mail. With both options, you need a paper EIN application. Then, you need to fill out the application by hand and either mail or fax it to the government. Once the government has all your details, they should mail you back a number within four weeks or fax you a number within four business days. The process takes longer if the government needs verification on any details. To streamline applying for an FEIN, you should consider working with a professional.
Are you wondering, “why do I need to obtain an IRS EIN number?” The answer varies based on your situation. In some cases, sole proprietors can use their Social Security Numbers to identify their business to the government. But, if you run a sole proprietorship, you need an EIN if you decide to hire an employee. Sole proprietors also need EINs if they collect and remit sales tax, use tax, excise tax, or nearly any other taxes. You also need an EIN to work with banks. If you want a bank account or a loan, you usually need to obtain this number first. You also need an EIN to set up a Keogh or Solo 401k plan or to file for bankruptcy.
Corporations, S-Corporations, partnerships, and limited liability corporations all need EINs. If your business has one of these structures, you need to obtain an IRS EIN number regardless of your activities. Estates, trusts, non-profits, and some other entities also need an EIN. Even if you aren’t legally required to obtain an EIN, you may want to get one to avoid identity theft. In the absence of an EIN, some small business owners use their Social Security Number, but that opens you up to personal risk.
If you’re still wondering, how do I get an EIN number, here is an overview of the steps:
- Prepare details for your application.
- Start to apply over the phone if based in another country.
- If formed in the United States, decide if you want to apply online, through the fax, or by mail.
- Provide the required details to the government.
- Wait for feedback on whether or not you need to provide additional information.
- Receive your EIN.
- Start to use your EIN.
As you can see, the process is relatively straightforward, but the fastest option is always to apply for your EIN online.
What is the difference between an FEIN number and an EIN? Well, the answer is simple. There is no difference. FEIN and EIN refer to the exact same number. EIN stands for employer identification number, and FEIN simply stands for federal employer identification number. These numbers are always issued by the federal government, and when you tack the word “federal” on, EIN changes to FEIN.
In some cases, your business may need a state identification number in addition to a federal identification number. However, state numbers aren’t called EIN. Instead, state-issued numbers are usually called tax ID numbers, and you need to obtain these numbers directly from your state.