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Any type of business in the USA with employees needs to have an EIN – Employer Identification Number.
Here I’ll talk at length about all the essential facts about EIN. You will learn why the EIN, also known as Federal Tax Identification Number or FEIN, is used to identify a business entity and why you need to protect this sensitive information.
The EIN is the critical information you need for several important reasons; the main ones being able to pay your taxes, open a business bank account, apply for a small business loan, and many more, which we’ll cover in more detail below.
Arguably, the most important reason you need a tax identifier number is to run a business legally. You realize the importance of an EIN now, right? Here we need to note that your business tax ID number is not the same as your personal tax ID number – you need both for different reasons.
What is a Tax Number or EIN?
Any US-based business needs to have a unique federal tax identification number known as an employer identification number or EIN for short. This number is issued by the IRS to every business operating in the USA and is often referred to as a FEIN number or Federal Employer Identification Number.
The EIN is a unique nine-digit number where the first two digits are separated from the rest: XX-XXXXXXX. The Social Security Number in the USA is also a unique nine-digit number, but it has another writing format: XXX-XX-XXXX. It is a way to differentiate both numbers.
Generally speaking, an EIN is the social security number for your business, and it describes what your business is. I also need to note that the EIN is also called a TIN or taxpayer-identification number when used for tax purposes in different cases
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What is the EIN Used For?
Any US-based business needs to have an EIN. The main reason why a business needs to have an EIN number is for tax purposes; there are several more reasons why the EIN is needed. As many people call it, the EIN, or tax number, is used when applying for a business bank account, business credit card, checking the business’s credit score, and more.
Does My Business Need an EIN?
If you are operating a legal business in the USA, your business needs to have an EIN number. The EIN is used to identify your business and several other vital reasons allowing you to run a successful business.
Also, if your business has employees, the EIN is essential for reporting employment taxes. No legal business can operate within the USA without an active EIN number.
Why You Need to Know Your Business Tax Id Number or EIN
Any legal US business needs to have an EIN number. While the main reason a business needs an EIN is for filing taxes, there are several other important reasons why you need to know your business’ EIN or tax number:
- To file a tax return
- To check your business credit score
- To open a business bank account
- To apply for a business credit card
- To issues an IRS Form-1099 to an independent contractor
- To apply for a business loan
How to Get an EIN?
As any business needs an EIN number, it is very straightforward to apply for one online. You need to visit the official IRS website and fill out the SS-4 form, the official online EIN application. The SS-4 form is simple to fill out with all business-relevant information, and it usually takes less than 10 minutes to fill out. After you fill out this form completely, your EIN will be automatically generated. You’ll need the following information to fill out the SS-4 form:
- Entity type: corporation, LLC, sole proprietorship
- Legal and trade name of the business
- Official business address
- Purpose of application
- Start date of business
- Primary business activity
- SSN, previous TIN, or EIN
Other Ways to Apply For an EIN Number
If you don’t have online access to the IRS website, you can apply for an EIN in several other ways. One way is to apply by fax, where you fill out the form and send it via fax. The return information, including the newly issued EIN, will be sent via fax within four business days.
To apply via mail, you’ll wait for about four weeks to get your EIN number. Simply mail the SS-4 form to your IRS office, and you should get your new EIN via mail. International applicants can apply via phone to get their EIN.
How to Find Your EIN?
The EIN is issued once per business entity and does not expire. But if, for some reason, you’ve lost, forgotten, or misplaced your EIN number, you can make an EIN number lookup to locate it. Here are several ways you can look up your employer identification number:
- Check your email for the email confirmation from the IRS, confirming your application and receipt of your tax ID number – EIN
- If you’ve used your EIN when opening a bank account, then check with the bank account documentation
- If you’ve used your EIN number to apply for a business license or a permit, you can locate it with the application documents
- If applicable, you can find your EIN number with a previously filed tax return
Contact the IRS to Find Your EIN
If all of the above efforts to locate your employer identification number fail, you can also call the IRS and look up your EIN. You need to call the Business & Specialty Tax Line on the number 800-829-4933, between 7 AM and 7 PM local time.
You should note that only authorized persons can look up an EIN, as they’ll need to provide identifying information. Also, the waiting times are very long, and this should be the last option for locating your EIN number. If you have lost or misplaced your tax identification number, do not apply for a new one, but do everything you can to locate your existing EIN.
When Do You Need a New EIN Number
The initial EIN you get assigned by the IRS will stay with the business forever. However, there are instances when a business will need a new EIN. One of the most common reasons you need a new EIN is if your business changes ownership or owning structure.
For example, when you purchase another business, or your business becomes a subsidiary, you need to apply for a new EIN. Depending on the type of registration of the business with the IRS (sole proprietor, corporation, partnership, LLC, or other), there are varying circumstances where you need a new employer tax identification number.
In the event of changing your official business address, you don’t need to change your EIN, but you’ll need to inform the IRS of the changes. This is done by filling out the appropriate IRS forms. In some cases of a business name change, you may need to get a new EIN number.
Once a new EIN number gets issued for your new business entity, you don’t need to cancel your previous EIN. If the need arises, you can reopen your previous business and continue using your original EIN. For example, if you’ve gone into a partnership and it did not work out, you can revert to your original business entity, and you’ll need to use the original EIN number for that business.
How to Cancel your EIN
Once you get an EIN issued for your business, it becomes a permanent Federal employer identification number – called EIN or FEIN number. Under no ordinary circumstances will the IRS cancel an EIN that is in use. If a business closes down, its EIN number will never get reassigned to another business entity – it will still belong to the original business and can even be used at a later date.
The only way to cancel your EIN number is to determine that you don’t need one after you’ve already received one. For example, if you’ve planned on opening a business and the business never started up, then you can ask the IRS to close your business account.
To do this, you need to prepare the following documents and mail them to the IRS at their official headquarters address: Internal Revenue Service. Cincinnati, Ohio 45999:
- Complete business name of the business entity
- The EIN number
- Official business address
- Reasons for closing the account
- Copy of the EIN Assignment Notice (if you have it)
To be able to close a business account with the IRS and cancel your EIN, you’ll first need to settle all debts toward the IRS: all taxes, including income tax, payroll tax, and employment taxes you may have pending.
Looking Up the EIN of another Business
There are some instances where you may need to look up another business’s EIN number. It could be when verifying a new client or looking to verify a supplier, for example. In some businesses like insurance, the EINs of other companies are necessary for daily business operations.
Here is how you can look up the EIN of another business:
- Ask the company – someone in the accounting department should have the tax identification number of the business
- Search the SEC filings – any publicly traded company needs to list their EIN with the SEC (Securities and Exchange Commission), and this is public information listed under “IRS No” on the official SEC website
- Lookup the EIN number with the company’s business credit report – many credit bureaus allow you to view another’s company business credit report for a specific fee; the credit reports has the business’s EIN
- Use any paid EIN database – many commercial EIN databases charge a fee for access to a business’s EIN number and other important company information
Importance of Protecting Your Tax Information and EIN
Even though an EIN is assigned by the IRS and is considered public information, it should be guarded. Unlike other situations where you can close your account and get another one, you cannot ask for a new number in the case of an EIN theft. It would be best to take care of your official business information and only grant it to verified third parties.
Just like personal identity theft, if someone steals a business’s EIN, they steal a corporate identity. With the EIN, they can open business banking accounts, corporate credit cards, and more. Suppose a person with malicious intent gets a hold of your EIN, official business name, and other essential information. In that case, they can commit invoice fraud, claim customer checks, and more, permanently damaging your business.
How To Check if Your Tax Information/EIN Number Has Been Stolen/Hacked
If your business succumbs to corporate identity theft starting with your EIN number, you can’t check it directly but need a system of checks to verify that a theft has occurred. Because corporate criminals are becoming more inventive, it is difficult to note this immediately. Here are some signs pointing that your tax info has been stolen:
- You can’t e-file a return because one was filed using your EIN
- Your tax return is accepted as amended, but you’ve not filed it yet
- You get a rejection notice for a routine extension to file because a return with your EIN is already on file
- You get tax notifications on employees who don’t work for you
- You receive bills for a credit line you’ve never taken
If you fall victim to an EIN theft, you need to report it to the IRS immediately. There are several ways you can do this, and visit the IRS website for more detailed info. Another thing I always advise businesses to do is to check their credit reports regularly – at least once a year. This way, you can compare your business info and notice if anything is amiss. If you notice discrepancies, you need to immediately report them to the credit reporting agencies and the IRS. However, this is a topic for another time.