One of the most important steps of starting a business is ensuring compliance with the Internal Revenue Service’s (IRS) office. Such compliance requires you to obtain your Employer Identification Number (EIN), or Business Tax ID. This number is unique to your company just like your Social Security Number is to you. The IRS will need this number in order to identify your company and keep track of your tax reports and requests.
Despite popular belief, obtaining our Employer Identification Number is a simple and efficient process. But before we submit our request, first we need to understand what exactly this number is and why we need it. Then, we’ll go over the steps to submit our EIN request.
What is the Employer Identification Number?
The EIN is a unique nine-digit number that the IRS provides to companies and corporations with operations in the United States. The IRS assigns this number to businesses in order for them to identify the company and keep track of tax forms and documents. It is similar to the Social Security Number (SSN) or the Individual Taxpayer Identification Number (ITIN) for individuals.
Besides businesses, the IRS can issue an EIN to employers, sole proprietors, corporations, partnerships, non-profit organizations, trusts, estates, government agencies, and any other business entity.
Why Do I Need an Employer Identification Number?
There are many reasons why our business might need to request an Employer Identification Number beside taxes. Several banks, credit unions, and other financial institutions will ask for the EIN before opening a business account. Getting a business loan, a line of credit or another type of financing might require having an EIN, too.
Also, when we work as self-employed entities or independent contractors, an EIN might work as a valid ID for our clients. This way, we keep our personal SSN safe, and we even look more professional than without.
How Can I Get My Business Tax ID?
Requesting and obtaining our Employer Identification Number is not a complex process, as one may think. The IRS has four different channels through which we can apply for the EIN. Before you begin the process, we recommend this article on how to apply for your business tax ID. Then, you can decide whether to apply online, over the phone, by fax, or by mail.
When you apply online, you will receive your EIN immediately after your information has been validated. In order for you to be able to apply online, you must have a valid U.S. ID number, and your business must be located in the U.S. or territories.
To apply over the phone, you must call the Business and Specialty Tax line between 7:00 am and 10:00 pm, Monday through Friday. Once they have received and validated your information, you will receive your EIN by the end of the call.
To apply by fax, you must complete and send Form SS-4 from your state fax number. This way, you can receive your EIN within the following four business days. When we apply by mail, we must send the same form to the corresponding IRS office. Our EIN is delivered within four weeks.