How To Get An EIN & Why You Need One?
When starting a business, there are a ton of hoops that you have to jump through as a new business owner. And with good reason. Without getting too political, the government needs to know your business’ information in order to ensure fair and equitable treatment for all taxpayers.
And without getting into the controversies of taxation, we can hopefully all agree that some regulations offer the benefit of safeguarding citizens from foul play in the marketplace.
At least that’s one of the main reasons that the IRS exists. And in order for the government to “do its job” of promoting equitable treatment & fair play in the marketplace, every business needs to register his or her entity with the IRS.
New business owners essentially “register with the IRS” when they apply for an EIN.
The rest of this article will explain the function of an EIN as well as how you can apply for one.
Functions of the EIN
The primary function of an EIN is translating key information about your business to the internal revenue service. By doing so, the IRS can make sure that you & your employees are taxed correctly. In addition, it aids in the processing of tax returns for your business & employees.
Your EIN also translates key business information to financial institutions. Therefore, you’ll need one when applying for other business-related financial products, such as a loan, a business checking account, or a merchant account.
The reason for this is that the EIN aides financial institutions in the screening process of prospective customers so that they limit risk & protect themselves against fraud.
Do I Even Need An EIN?
At this point you may be asking yourself if you really need an EIN, the fact of the matter is that it depends on how you operate your business.
If you can answer ‘Yes’ to any of the following questions, then you’ll need to apply for EIN:
- Do you have employees?
- Do you operate your business as a corporation or a partnership?
- Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following types of organizations?
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Non-profit organizations
- Farmers’ cooperatives
- Plan administrators
How To Apply For An EIN
As long as your legal business address is in the United States, you can apply for a free EIN from the IRS. There are several different methods that the IRS provides for you to fill out an EIN application.
1. Apply online
The most convenient way to obtain your EIN is by applying online. In fact, the whole process only takes about 5 minutes. Once completed, you’ll have your EIN number to open a business checking account & merchant account.
Important Note: Applying for an EIN online is completely free.
2. Apply by mail
For those individuals who would rather push the paper, you can fill out an SS-4 form, the official document for requests for EINs. Once you have your completed SS-4, simply send it to the following applicable address:
For entities with a legal business address inside the lower 50 states or the District of Columbia, send forms to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
For entities with no legal residence, principal place of business, or principal office or agency in any state, send forms to:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Important Note: Expect to receive your EIN information via mail.
3. Apply by fax
You can also send your completed SS-4 to the IRS via fax.
For entities with a legal business address inside the lower 50 states or the District of Columbia, send faxes to (855) 641-6935.
For entities with no legal residence, principal place of business, or principal office or agency in any state, send faxes to (855) 215-1627 (within the U.S.) or (304) 707-9471 (outside the U.S.).
Important Note: If you provide a return fax number, you’ll receive a fax from the IRS with your EIN information within 4 business days.
4. Apply by telephone (for international applicants only)
International applicants can call the IRS at the following number: 267-941-1099.
Important Note: This number is not toll-free.
Crunched For Time?
If time is of the essence, you’ll want to apply for your EIN online because you’ll receive your information instantly after completion, making it the most convenient application method.
You Have Your EIN: What’s Next?
Once you have your EIN, you’re pretty much official. However, until you start providing your product & service to your customers and accepting payment for it, you’re not actually in operation.
You’ll need to:
- Solidify your product offering
- Engineer a distribution method
- Hire & train employees
- Open a merchant account so you can accept payment for your service
- Develop a launch plan & start marketing to prospective customers
- Service incoming customers & generate revenue
- Retain current customers
By the time you are getting an EIN, you may have already figured out exactly what you want to offer customers. It’s actually better if you did, but nevertheless the steps above offer a logical approach to getting from ideation to launch & beyond.
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You can also view more helpful articles like this one on our blog.
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