When starting a business there are a lot of details to be aware of – and the application for an “EIN” number is one of them.
An EIN number, or Employer Identification Number, is a federal tax identification number unique to your company and is assigned by the Internal Revenue Service (IRS).
It’s important to note that the IRS does not require all companies to apply for an EIN.
Some business entities such as a partnership, corporation, and Limited Liability Company (depending on it’s tax election) don’t need one, but any business that will not hire employees is not required to have one either.
Many people aren’t aware that a sole proprietor or single-member LLC may not need an EIN to start a business, however, the IRS allows a sole proprietorship without employees to use the business owner’s Social Security Number as the Taxpayer Identification Number (TIN). Even though it may not be required, it may be worth considering anyway. Here’s why – Identity Protection!
Like most people, you probably want to minimize where your Social Security Number shows up due to identity theft concerns and an identification number may be needed for some business transactions. A few examples include:
- Some vendors will request an EIN in order to purchase products and services from them.
- As an independent contractor, you will likely need to provide an EIN or Social Security number to your customer in order to issue a 1099.
- In many cases, the application for a business license requests a tax id number.
- Your SSN will also show up on your business tax return.
It’s worth noting that some banks will require a business to provide their EIN when opening a bank account even though they aren’t required to have one.
If you have a sole proprietorship and have employees or you just want to get an EIN to protect your Social Security Number, it’s pretty easy to apply for an EIN.
How to Apply for an EIN
There is no cost to apply for an EIN.
The easiest and fastest way to apply for an EIN is to visit the Internal Revenue Service (IRS) website, between the hours of 7 am – 10 pm EST, Monday – Friday.
The online application process only takes about 5 minutes to file the EIN online, and the number will be ready in seconds. If applying online isn’t an option, you can also complete an EIN application by mail or fax by sending IRS Form SS-4 to the IRS fax number 855-641-6935.
You can even get an EIN over the phone if the company was formed outside the U.S. by calling 267-941-1099. If filing by phone, note that it isn’t a toll-free number.