How-To Obtain An Employer Identification EID Number

Federal Tax ID Number: How-To Obtain An Employer Identification Number

Federal Tax ID Number: An Employer Identification Number (EIN) is necessary or recommended by most experts for all business owners. The EIN is a nine-digit account

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number assigned to employers by the IRS for the collection and reporting of taxes withheld and wages paid to the employees. It is a version of a TIN or Taxpayer Identification number.

Who Needs Them?

EINs are usually assigned to corporations, partnerships, estates, trusts, and other legal entities for filing and reporting purposes. All partnerships, corporations, and trusts need an EIN, even if they have no employees.

Generally, sole proprietors should only obtain an EIN if they have employees, a Keogh pension plan, or must pay certain federal excise taxes. An individual is also considered a sole proprietor for federal tax purposes when that individual operates the business through a domestic Limited Liability Company (LLC), and does not elect for their LLC to be taxed as a corporation. In such cases, the LLC is disregarded for tax purposes and the individual owner is subject to the same federal tax requirements as a sole proprietor, including the need to obtain an EIN. At the individual owner's option, the disregarded LLC may request that a number be assigned to it in addition to the number assigned to the individual owner as a sole proprietor.

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It is also possible to obtain an EIN as a sole proprietor when you are planning on forming a business entity (such as an LLC or corporation). Most experts advise small business owners to separate their business and its taxes from their own personal social security numbers (even if they have no employees other than themselves).

Household employers are also required to complete Form SS-4 to get an EIN, even if your only employees are household staff (such as domestic workers like housekeepers, nannies, drivers, etc.) working in your private home.

Use Form SS-4, Application for Employer Identification Number, to obtain an EIN by mail or telephone. You can get an EIN within minutes by calling the Tele-TIN number for your state, or you can send the completed form to your local IRS Service Center to receive your EIN by mail. Either way, you need to complete Form SS-4. Call 1-800-TAX-FORM. You can also get it at most IRS and Social Security Administration offices.

Application by Tele-TIN

1. Complete Form SS-4 and call the Tele-TIN number listed for your state.

2. Write the EIN the IRS representative gives you in the upper right hand corner above the phrase "Official Use Only." Then sign and date the Form and either:

Mail it within 24 hours to the Tele-TIN unit at the service center address for your state

- or -

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Fax it within 24 hours within a cover sheet identifying your form as a Tele-TIN submission. Be sure to enter the following information on your cover sheet: date your are faxing the form, Attn: IRS Tele-TIN office, FormSS-4, Employee Name/Number (EIN or the name the IRS Representative gives you), your name, phone number, and either your Social Security Number or EIN.

Application by Mail

1. Complete Form SS-4 at least 4-5 weeks before you will need your EIN.

2. Mail it to the service center address for your state.

3. You should receive your EIN within four weeks by mail.

Tips

It is recommended that you apply for an EIN before you open for business so that you will have it ready when the first taxes must be deposited. File only one Form SS-4, regardless of the number of businesses operated or trade names under which a business operates.

Be sure to check with your local state franchise tax board to obtain any state or local EINs that may be required.

If you become the owner of an existing business, do not use the EIN of the former owner. If you already have an EIN, use that number. If you do not have one, apply for one using Form SS-4. (The exception to this general rule: if you become the owner of a business by purchasing stock, you must use the business's EIN).

When You Need A New EIN.

If you already have an EIN and the organization or ownership of your business changes, you may need to apply for a new number when:

An existing business is purchased or inherited by an individual who will operate it as a sole proprietor (unless they already have an EIN).
A sole proprietorship changes to a partnership (or vice versa).
A corporation changes to a partnership or sole proprietorship (and the corporation is not an LLC changing its classification).
An individual owner dies and the estate takes over the business.

For more information on sole proprietorships and other functions of corporations, see "How-To Understand Corporations," "How-To Incorporate Your Business".