What Is an EIN Number? – A Comprehensive Guide

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What Is an Employer Identification Number (EIN)?
Do you want to know what is an EIN number for LLC? The employer identification number (EIN) is a distinctive code assigned to a business organization to facilitate its recognition by the Internal Revenue Service (IRS) without any confusion.
It’s mandatory for registered business entities, such as a nonprofit, corporations, or LLCs, to appoint and understand what is an EIN number on their formation documents in every state. Employers frequently use EINs to file tax returns. It comprises nine digits and is structured as XX-XXXXXXX.
In summary, if you're wondering, “What is an EIN number for LLC?”, they help keep your personal and business finances separate.

Do I Need an Employer Identification Number?

As per the reporting requirements of the IRS, some companies are obligated to acquire an EIN. If a company meets certain criteria, they must apply for and obtain an EIN.

• Has any workers at all


• Use a Keogh method


• Does tax return filing, including payroll, excise, and ATF (alcohol, tobacco, and guns)


• They are affiliated with a wide range of groups, from trusts and estates to charities and NGOs


• Functions either as a corporation or a partnership


• Non-resident aliens' wages should be subject to withholding

What Is an EIN Number for a Business?
Before a business can commence its operations, you must first have an understanding of what is an EIN number for LLC and it must meet specific criteria to be able to acquire an EIN. Just like SSNs are used to identify US citizens, EINs are used to recognize businesses.
These identification numbers are also known as Federal Tax Identification Numbers (TINs) and contain details regarding the state where the business is registered. Furthermore, the IRS employs EINs to identify taxpayers who are liable to file several business tax returns.
Businesses that operate as corporations or partnerships withhold taxes from sources other than wages, have employees, file particular tax reports, or understand clearly what is required to obtain an employer identification number.
Entities involved in business activities are eligible to request and obtain EINs

• Limited liability companies (LLCs)


• S corporations


• Government Agencies


• Sole proprietorships


• Non-profit organizations (NPOs)


• Corporations


• Trusts


• Estates


• Partnerships

How to Get an Employer Identification Number?
In order to obtain an Employer Identification Number (EIN) from the IRS, applicants are required to complete Form SS-4, which can be accessed on the IRS website.
The application must include specific details, including the name and personal taxpayer identification number of the company's principal officer, partner, owner, trustor, or any other relevant title.
It’s important to provide all necessary information as requested by the IRS to ensure the issuance of an EIN.
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How To Get a Free EIN?
To obtain a free EIN, taxpayers can conveniently apply online through the EIN Assistant on the IRS website. However, it’s important to note that before acquiring an EIN, the IRS will require information such as the business's formation date and legal name.
To obtain approval for the business's name, it’s necessary to register the business with the state prior to obtaining an EIN.

EIN Application Overview
Would you like to learn more about what is an EIN number for business? To obtain an EIN, there are two options available: you can either apply on the IRS website or utilize the services of an independent provider. Upon submitting the application, the EIN will be issued immediately.
However, in case you require a confirmation letter, it’s recommended to have Adobe Reader installed beforehand. The application process consists of 12 essential steps that you will need to complete.

1. Verify That You’re Eligible
Individuals with different entrepreneurial backgrounds may not qualify for online EIN applications. It’s advisable to conduct research if there are any limitations that need to be addressed if you have a unique situation.
Business owners often encounter a problem when attempting to apply for EIN online after already receiving one online. In such cases, applicants are required to either fax or mail their application. Only those who meet specific criteria are eligible to apply for an EIN.

• Possess an up-to-date taxpayer identification number


• Do the bulk of your commercial operations inside the United States or one of its territories


• Company ownership or control and a single-day EIN acquisition

2. Understand the Application Process
To avoid restarting the application, it’s important to complete it in one attempt, as there’s no option to save progress and return. Additionally, if the application takes longer than 15 minutes, the session will expire.
It’s recommended that you apply for an EIN as soon as you register your company. However, if you miss this opportunity, it’s best to apply at least two weeks before your taxes are due or before applying for a business loan.
This is because it takes the IRS approximately two weeks to process your EIN, despite receiving the identification number immediately.

3. Determine Who Will Apply
It’s vital to determine who should apply for an Employer Identification Number (EIN) from the IRS, as they will only provide one EIN per responsible party, which refers to the individual who owns or manages the organization on a daily basis.
While it’s possible to have a third party handle the application process, it’s necessary to give them permission to do so.
In order to provide a third party with authorization, certain steps must be taken

• Make sure the nominee stores an archived copy of the declaration at their office


• Fill out the SS-4 and have a third-party designee sign it


• Get an EIN on behalf of a nominee by reading and signing a statement giving that person permission to do so

Additionally, you will also be notified about the status of your application and file after submitting the online form as a taxpayer.

4. Gather Documents for the Online Application
Would you like to learn more about what is an EIN number for business? In order to show that your business is registered under a qualifying business structure, it’s necessary to provide documentation as proof.

• Employee information: A corporate resolution that includes the names, job titles, and maximum salaries of all newly hired employees must be provided.


• Company identification: The necessary documents for starting a business include the articles of incorporation, the business registration certificate, and a DBA name.


• Personal identification: The three important documents required are the Social Security card, ITIN, and birth certificate.

5. Accept Permissions
Before starting the online application, it’s necessary to agree to an IRS notice that allows the government to supervise your actions while filling out the form. Once you click on the "OK" button, you can commence with the application process.
It's important to have a clear understanding of what is an EIN number for an LLC before proceeding with this step. Be sure to do your research and gain knowledge about this topic before moving forward.

6. Identify Yourself
After selecting the appropriate business structure, you will have to provide additional details about yourself and any partners involved in the company. These details will include the state in which your business is headquartered and the number of members in your organization.
Additionally, the application will inquire about your marital status with respect to your business partner. It’s important to note that the information entered in this section should pertain to the responsible party, i.e. the owner or a member of the company. If someone else is filing on their behalf, this should be disclosed.

7. Establish Your Reason for Applying
Would you like to learn more about what is an EIN number for business? It’s necessary to provide a reason for applying when obtaining an EIN.
The IRS has identified multiple purposes for obtaining an EIN, such as in cases where

• Acquired an established company


• Have taken on an employee (or more)


• Activated a banking profile


• Opened a new company


• Modified organizational structure

9. Disclose Addresses
When filling out the EIN application, it’s mandatory to provide the address of your business. You cannot use a P.O. Box as the address on your application. It must be a physical location.

• A real, live place


• Localized inside the United States

• Location (county, state, and territory)


• Launch time


• Formal title

• If you included a mailing address, the IRS could take up to two weeks to deliver your letter


• The letter can be downloaded and printed online using Adobe Reader

After finishing the application and responding to follow-up questions, you can select the submit option. Upon doing so, you will receive your EIN immediately, which you can then proceed to download, save, and print the confirmation notice.
Before you take any action, it's crucial to have a comprehensive understanding of what is an EIN number for an LLC. Therefore, it's highly recommended that you conduct thorough research and acquire knowledge about this subject before proceeding.
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When Should a Business Get an EIN?
It’s advisable to obtain an EIN number for your business regardless of its type, as it’s necessary for applying for a business bank account or credit card. This number is typically requested by banks in order to open a business banking account.

Why Get an EIN If You Don't Have to?
Typically, individuals who work as independent contractors, freelancers, entrepreneurs operating small businesses from their residences, or those who take advantage of the gig economy by having side jobs are not obligated to obtain an EIN.
It may still be beneficial for you to acquire an EIN even if the IRS does not mandate it if you

• Use a company credit card to make purchases for the company


• You should get a business loan if you need capital to launch or expand your company


• Avoid giving out your real Social Security number


• Interested in opening a business checking account

Benefits of an Employer Identification Number
EINs are exclusive to the particular businesses they are allocated to, with no duplication of the same number set to another company, even if the original employer shuts down. EINs do not have any expiry date, and obtaining one is critical for business operations.
Without an EIN, you cannot run your business, and it’s also a requirement for performing the following tasks

• Tax registration for businesses and federal tax filing


• Employing and compensating workers


• Get business financing if you qualifyMake a will or establish a trust or a nonprofit


• Getting credit, opening bank accounts, and investing extra money are all good places to start


• Build trust by demonstrating that you are a responsible, dedicated businessperson


• Keeping corporate walls up

Closing Your Employer Identification Number
When an entity is given an EIN, that unique identification number will always be linked to both the individual and their company. The EIN is permanently linked to the entity and cannot be canceled by the IRS.
It’s a crucial element for financial reporting and remains associated with the entity even if no returns are filed. Moreover, once an EIN is issued, it can be utilized at a later date, as per the entity's requirement.
In case you are allotted an identification number by the IRS but later realize that it was not required, the associated business account can be shut down. This is a common situation for startups that do not end up launching.
To close the account, a physical letter should be sent, including the legal name, business address, EIN number, and the reason for the account closure. The EIN will still be valid, but the IRS business account will be put on hold.
Prior to taking any steps, it’s vital to fully comprehend what is an EIN number for LLC first. Therefore, it’s strongly advised that you conduct extensive research and gain a thorough understanding of this topic before proceeding further.
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Employer Identification Number vs Taxpayer Identification Number (TIN)
Would you like to learn more about what is an EIN number for LLC? The term Tax Identification Number (TIN) refers to a range of identification numbers that can be utilized on tax forms, among other purposes. It includes the Employer Identification Number (EIN), which is a specific type of TIN.
The TIN is a comprehensive descriptor for various numbers that may be used on tax forms, and this is not an exhaustive list.

• PTIN (Preparer Taxpayer Identification Number)


• ITIN (Individual Taxpayer Identification Number)


• ATIN (Adoption Taxpayer Identification Number)


• SSN


• EIN

Employer Identification Number vs Federal Employer Identification Number (FEIN)
The FEIN, or federal employer identification number, functions similarly to an EIN but is issued by the federal government rather than the state.
One advantage of having a FEIN is the ability to register for the Electronic Federal Tax Payment System (EFTPS), which enables simple tax payments via phone or the Internet.

What Happens If You Lose or Misplace Your EIN?
In case you lose your EIN, you can retrieve it by referring to the notice sent by the IRS during your EIN issuance. Another way to recover it is by contacting the bank where you hold your day-to-day account.
Additionally, you can locate it on your previously filed tax returns. If none of these methods work, you can get in touch with the IRS' Business & Specialty Tax Line at 1-800-829-4933.
It’s important to ensure that you have all the necessary identifying information available when speaking to an operator. If you're unsure about what is an EIN number for LLC, this is one of its primary benefits.
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What Situations Require an EIN?
In general, sole proprietors and contractors do not need to obtain an EIN. However, an EIN becomes necessary if

• Possess an S or C-corporation election in your single-member LLC


• In order to meet the tax withholding rules, you must have one


• You manage the business affairs of an estate after its owner has passed away


• Establish a business bank account


• Incorporated or established a partnership


• It's your responsibility to fork over the necessary federal excise taxes


• The money an expatriate earns in other ways should be withheld


• Belong to a municipal or state government


• Take charge of a decedent's estate and see it through the probate process


• Established a trust with the inheritance money


• You have reorganized your company


• Own a company with numerous owners and file your taxes as a multi-member LLC


• Provide a retirement plan, such as a pension, profit sharing, or an annuity


• Have the intent to fill available positions with new hires


• Established a retirement fund


• Represent the business interests of a decedent's estate


• Established a new company

What Is an EIN? – Frequently Asked Questions How Long Will It Take to Get an EIN?
If you apply for an EIN online, you can receive it right away. However, if you choose to fax the application to the IRS, it may take up to two weeks to process.
Alternatively, you can submit a paper application through mail, but the IRS suggests that it could take around four to five weeks to receive the EIN.

Can I Have Multiple EINs?
Would you like to learn more about what is an EIN number for LLC? It]s possible to have multiple EINs for each of your business entities. However, each individual business is limited to having only one EIN.
In the event that you make significant alterations to your business, such as modifying its structure, you may need to request a new EIN.

Is It Better to Use a Social Security Number or an EIN?
It’s impossible to avoid obtaining an EIN if the IRS deems it necessary. However, it’s wise to utilize an EIN for your business, even if it’s not mandatory, to avoid personal liability.
Utilizing your social security number for business purposes increases the possibility of

• Fiscal punishments


• Invasion of privacy/identity theft


• Legal implications

Bottom Line on What Is an EIN Number?
The EIN number plays a crucial role in the business world as it serves as a significant nine-digit identifier that simplifies tax compliance, financial management, and business expansion.
Entrepreneurs who comprehend the importance of this distinctive number can skillfully maneuver through the intricate maze of the business landscape.
Regardless of whether you're a new business or a well-established one, always bear in mind that the EIN serves as your reliable companion that helps your venture thrive and prosper in the cut-throat world of commerce.
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Moneycontrol Journalists were not involved in the creation of the article.