An employer identification number (EIN) is a nine-digit number assigned by the IRS. It’s used to identify the tax accounts of employers and certain others who have no employees. The IRS uses the number to identify taxpayers who are required employer identification number definition to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities.

Companies that change ownership structure must apply for new EINs, as do companies that merge with other businesses. Say Subhash requires an influx of cash and decides to partner with an investor. Once Subhash changes the structure of his company from an LLC to a partnership, he is required to apply for a new EIN that reflects the new entity. Owners of sole proprietorships are not required to file for an EIN, and can choose to use their Social Security number for the business.

Daily Limitation of an EIN and Security Enhancement

While all businesses are free to apply for an EIN, your business may not need to apply for an EIN or meet the minimum requirements. We’ll be in your inbox every morning Monday-Saturday with all the day’s top business news, inspiring stories, best advice and exclusive reporting from Entrepreneur. In the past, companies completed IRS Form SS-4 to request an EIN. Today, however, the IRS encourages business owners to apply for an EIN online. You may also need a tax ID number in order to pay taxes to your state. Even states that have no income tax may have other taxes you’ll need to pay.

An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to businesses for tax identification purposes. Publication 15PDF provides information on employer tax responsibilities related to taxable wages, employment tax withholding and which tax returns must be filed. More complex issues are discussed in Publication 15-APDF and tax treatment of many employee benefits can be found in Publication 15.

EIN

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An Employer ID Number (EIN) is an important tax identifier for your business. It works in the same way a Social Security number does for individuals, and almost every business needs one. To ensure fair and equitable treatment for all taxpayers, the IRS issues only one EIN per responsible party per day. This limitation is applicable to all requests for EINs, whether online, by telephone, fax or mail.

Who needs an EIN?

This applies to business with no income, which are not exempt from filing federal income tax returns. The EIN serves a similar administrative purpose as a SSN, but for a business entity rather than an individual person. In some cases, such as a sole proprietorship, an SSN may be used as a business Tax ID without applying for a separate EIN, but in order to hire employees or establish business credit, an EIN is required. Unlike a SSN, an EIN is not considered sensitive information and is freely distributed by many businesses by way of publications and the internet. As noted above, EINs are unique nine-digit numbers that are formatted as XX-XXXXXXX. EINs are issued by the IRS and include information about the state in which the corporation is registered.

• Simply visit the IRS website and follow the application prompts.
• Every organization must have an employer identification number (EIN), even if it will not have employees.
• Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
• The IRS also accepts paper mail applications, though it quotes an expected turnaround time of four to five weeks.
• The IRS recommends caution in dealing with any third party offering to provide an EIN in exchange for a fee.
• Even states that have no income tax may have other taxes you’ll need to pay.