Just like every US resident (with very few exceptions) must have a Social Security number to be identified and have their job and income tracked by the Government, a business must (usually) have an EIN. That\u2019s the beginning of the answer to the question: \u201cWhat is an EIN number?\u201d In a nutshell, an EIN is like the SSN counterpart for your enterprise. It stands for Employer Identification Number, and it\u2019s issued by the Internal Revenue Service to separate businesses from one another.<\/p>\n\n\n\n
It is also referenced as a FEIN, meaning Federal Employer Identification Number, or your business\u2019 tax ID number. Whatever you call it, an EIN is a unique nine-digit number that serves to identify your business for tax purposes. Most business owners have one, as it\u2019s required to open a business bank account, file business tax returns<\/a>, and apply for licenses. Knowing the purpose of the EIN number is just the first step, too. Give our guide a read to learn more about the types of businesses that need it, ways of applying and obtaining one, and all the benefits you\u2019ll enjoy once you get it.<\/p>\n\n\n\n Depending on your business type, and the IRS\u2019 criteria, you\u2019ll be able to determine whether you need an EIN:<\/p>\n\n\n\n You only need an EIN number for businesses structured as single-member LLCs if you have employees or excise tax liability. The same goes for sole proprietorships – if they don\u2019t have employees nor file excise or pension-plan tax returns, they\u2019re not required to apply for an employer identification number.<\/p>\n\n\n\n Now that you\u2019ve figured out whether your business entity needs an EIN, let\u2019s walk you through the process of obtaining one. Applying for an employer ID number is straightforward, but if you\u2019re not well-versed in admin, your registered agent<\/a> can deal with the EIN application instead.<\/p>\n\n\n\n As soon as your business is officially formed – i.e., you got your formation date and legal business name approved by your state – you can start the EIN application process. Don\u2019t forget to check if you have a valid Taxpayer Identification Number (SSN, ITIN, another EIN) before starting. The easiest way to apply is through the IRS EIN Assistant page<\/a>. Just follow the listed steps by adding the required information to your IRS EIN form; just make sure to do it in one sitting, as the session will expire after 15 minutes of inactivity. You can also file your application by fax or mail. <\/p>\n\n\n\n If your business isn\u2019t incorporated in the United States, you can\u2019t apply for an EIN. On the other hand, if it is, but you\u2019re the one who doesn\u2019t have a legal residence in the US, you can apply for a free EIN via telephone, fax, or mail.<\/p>\n\n\n\n The technical requirements for having a FEIN might not include you: You might be an independent contractor, freelancer, or sole operator. However, while it is correct that you don\u2019t need to have one, you might want to get it anyway. It would be unwise to dismiss the benefits you would be getting with getting an EIN out of hand.<\/p>\n\n\n\n Now that you know the long and short answer to the \u201cWhat is an EIN number?\u201d question, we can explain why having one brings many benefits even if you don\u2019t need it. First of all, most banks require an EIN to open a business banking account for you. Having one will make the whole process of tracking and managing your business expenses much more accessible. Not to mention that you\u2019ll be able to build your credit and therefore become eligible for more loans.<\/p>\n\n\n\n Secondly, if you\u2019re planning on hiring part- or full-time employees, you\u2019ll have to apply for a tax identification number. What is an EIN number\u2019s benefit in this case, then? First of all, you\u2019ll need an EIN to set up a payroll, so the IRS can track your taxes for it. Secondly, your employees will need to file their taxes separately under the LLC\u2019s 1040 form, and they\u2019ll need your EIN for that too.<\/p>\n\n\n\n Those with an LLC<\/a> should outsource its formation to an LLC service<\/a>, and it will apply for an EIN in your stead. This helps you maintain your \u201ccorporate veil,\u201d i.e., protect yourself from personal accountability for possible business debts. Since it\u2019s essential to do this right, hiring an online legal service<\/a> to cover that would be a great move.<\/p>\n\n\n\n Even as a solo entrepreneur, you will need to provide clients with either a Social Security number or FEIN to pay an invoice or for contract purposes. Having a FEIN adds to the credibility of your business, and shows that you are not doing your work as a gig; instead, you would be perceived as a dedicated professional. Furthermore, an employer FEIN denotes you as an independent contractor, rather than an employee and reduces the legal responsibilities of the company that hires you, which, in turn, might make it more likely to do so.<\/p>\n\n\n\n New entrepreneurs quickly realize that it\u2019s challenging to handle all aspects of the business by themselves. They must rely on suppliers, vendors, and general cooperation from other companies. While nothing will ever guarantee good relationships, having a business with a FEIN makes it more likely for third parties to work with you. Some of them will check your business credit before agreeing to a contract with you; a FEIN shows them you are a reliable entity.<\/p>\n\n\n\n Non-US citizens without a Social Security Number will find it easier to establish a business in the United States with an EIN. This opens up the possibility of getting a business credit card or bank account for their business before getting a Social Security number as a citizen. <\/p>\n\n\n\n Finally, when you get an EIN for tax reporting purposes, your privacy will be protected, too. An EIN boosts the confidentiality of your Social Security number (SSN), as you can now offer that instead of your personal ID number as a form of identification. Keeping your business and private finances separate will add an extra shield against malicious perpetrators. We hope all these good points help you decide to get an EIN as soon as possible – provided you have a company, of course.<\/p>\n","protected":false},"excerpt":{"rendered":" Just like every US resident (with very few exceptions) must …<\/p>\nWho Needs an EIN?<\/h2>\n\n\n\n
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How to Apply for an EIN Number<\/h2>\n\n\n\n
Who Doesn\u2019t Need a Federal Identification Number?<\/h2>\n\n\n\n
Why Should I Get an EIN Number?<\/h2>\n\n\n\n