What is a Federal EIN Number? – A federal EIN is an Employer Identification Number, also known as a Federal Tax Identification Number. It is like a social security number for a business, or a business tax account. An EIN is a nine-digit number (e.g. 12-3456789) assigned to sole proprietors, partnerships, LLCs, corporations, estates, trusts, and other entities for tax filing and reporting purposes.
Do You Need an EIN? – We highly recommend that businesses obtain an EIN number. If any of the following questions results in a “yes,” then you must apply for an EIN:
- Do you have employees?
- Do you operate your business as a corporation or a partnership?
- Do you operate your business as an LLC with more than one member?
- 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, which is a tax deferred pension plan for self-employed individuals?
- 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
Do You Need a New EIN? – Generally, businesses will need to apply for a new EIN number when the ownership or structure of the business has changed. A new EIN is not required when the only change is the name of the business. If you have specific questions about whether you need to apply for a new EIN number, contact one of our attorneys. We would love to help.
Why is an EIN Recommended? – Privacy, privacy, privacy. An EIN number allows an owner to keep his or her social security number as private as possible limiting the risk of personal identity theft. For example, if your business acts as an independent contractor, you can provide the EIN rather than a social security number for 1099 purposes.
- It may also be required if you wish to open a bank account, apply for credit cards, apply for business permits, work with suppliers, or provide 1099s to independent contractors in the name of the business.
How to Apply for an EIN?
Though there are several ways to obtain an EIN, the easiest way with the quickest result is through our online application. Form SS-4 is used to apply for an EIN number. Below is a list of the requirements and general steps to get EIN numbers.
- You may apply for an EIN online if the principal business is located within the United States or U.S. territories.
- The person applying must have a valid taxpayer identification number such as a social security number or Individual Taxpayer Identification Number.
Step 1 – Provide the Legal Name and Type of Business Entity
- Provide legal name as it appears on social security card, charter, or another applicable legal document.
- Business entity may be:
- Sole Proprietorship,
- Nonprofit Organization,
- Limited Liability Company (LLC),
- Estate, or
Step 2 – Provide the Purpose of Requesting an EIN
- Started a new business,
- Hired Employee(s),
- Banking purposes,
- Changed type of organization,
- Purchased active business, or
- Created a Trust
Step 3 – Provide Information About the Responsible Party of the Business
- Full name, and
- Social security number or Individual Taxpayer Identification Number
Step 4 – Provide the Mailing and Street Address of the Principal Place of Business
- Full address of where the business is headquartered including the name of the County.
Step 5 – Provide the Business Purpose or Purposes of the Entity
- Check the box that best describes the principal activity of the applicant’s business. Those boxes include:
- Construction, Real estate, Rental & Leasing, Manufacturing, Transportation & Warehousing, Finance & Insurance, Health Care & Social Assistance, Accommodation & Food Services, Wholesale-agent/broker, Wholesale-other, Retail, and Other.
Step 6 – Authorize a Third Party Designee by Signature
- You must authorize LawyerPrepared to apply for and receive the EIN on your behalf.
- The designee’s (Lawyer Prepared) authority terminates at the time the EIN is assigned and released to the designee (You).
Step 7 - Get EIN number
- After completion, the EIN number application is sent immediately, but IRS processing can range from same-day to several weeks time, depending on the applicant’s circumstances.
Reasons to obtain an EIN:
- Privacy, privacy, privacy. An EIN allows an owner to keep her social security number as private as possible limiting the risk of personal identity theft. For example, if your business acts as an independent contractor, you can provide the EIN rather than a social security number for 1099 purposes.
- It may also be required if you wish to open a bank account, apply for credit cards, apply for business permits or provide 1099s to independent contractors in the name of the business.
When an EIN is required by the IRS:
- If a business has employees
- When a business has multiple owners (i.e. operates as a corporation or partnership)
- When the business files tax returns for Employment, Excise, or Alcohol, Tobacco and Firearms.
- When the business withholds taxes on income, other than wages paid to a non-resident alien.
- When the business has a Keogh plan (tax deferred pension plan for self-employed individuals)
- When the business is involved in any of the following organizations: Trusts (except certain grantor-owned revocable trusts), IRAs, Exempt Organization Business Income Tax Returns, Estates, Real estate mortgage investment conduits, Non-profit organizations, Farmers’ cooperatives, and Plan administrators.