What Is An EIN
Long story short, an EIN is an Employee Identification Number. Much like a Social Security number, but for businesses instead of people, an EIN number is how the government, specifically the IRS, keeps track of all the business entities in the US. Sometimes referred to as a FEIN (Federal Employee Identification Number), an FTIN, or Federal Tax ID, you’ll need an EIN number if you plan on opening a business bank account, paying your employees, or filing taxes for your business… Which we highly recommend.
Does An LLC Need An EIN Number?
Put simply, if you have an LLC, then you should also have an EIN number. According to the IRS. “An LLC will need an EIN if it has any employees… Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.” While there are certainly exceptions to these regulations, there are many benefits to having an EIN, even if your particular business entity doesn’t require one.
Even though most of our competitors don't, we include an EIN number as a part of our standard packages. You can read more about our why here.
Benefits of an EIN
The biggest advantage of getting one is being able to actually operate your business. So calling it an advantage is a bit of an understatement because you simply cannot run your business without getting an EIN. But once you have one you’ll be able to:
- Hire & pay employees
- Open bank accounts, obtain lines of credit, and invest profits
- Separate personal and professional finances & assets
- File business taxes & register state taxes
- Shield personal information & protect from identity theft
Do I Need An EIN If I’m A Sole Proprietor
As a sole proprietor, you don’t have employees to pay and you shouldn’t have to worry about opening business accounts or filing business taxes. But, do you need an EIN number anyways? Once again, we’ll turn to the IRS, which states that “A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN (but can get one). In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number.” However, if you plan on filing for a pension or excise plan, you’ll be required to have an EIN. So, it may be a good idea to get an EIN number anyways.
How Do I Get An EIN?
Now that you know what exactly an EIN number is, it’s time to figure out how you get one. Applying for an EIN is a fairly easy and free process. There are three different options, so choose whichever you’re most comfortable with.
- Online application: You can submit an online application for an EIN directly through the IRS website. This is the quickest way to obtain an EIN, as it will be issued to you immediately after your information has been validated at the end of your online session.
- Application by fax: You can apply for an EIN via fax, by sending Form SS-4 (PDF) to the appropriate fax number. According to the IRS, once a determination has been made that your LLC needs an EIN, your new EIN will be faxed to you within four business days.
- Application by mail: You can also mail in a completed Form SS-4. Once a determination has been made that your LLC needs an EIN, your new EIN will be mailed to you.
How Much Does It Cost To Get An EIN Number?
As we mentioned briefly earlier, there are no associated fees with registering an EIN. This is typically one of the steps business owners take on their way to forming an LLC or corporation, which can be an expensive and lengthy process. If you want a faster, less expensive experience where you don’t have to deal directly with the IRS (who doesn’t?) we’re here to lend a helping hand.
While we can’t help you outline a business plan or hire your employees, we can help you get to that stage. Our goal is to help small business owners transform their companies into legal business entities. Forming an LLC or establishing a corporation protects your personal assets, allows you to file business taxes, and protects the business from liabilities. Once you have your EIN, establishing a legal business entity is the next step to take.
How To Find My EIN Number?
If you’ve already formed a business entity and are now filling out a loan application, filing a tax return, or opening a business bank account, you already know that you need your EIN to complete them. How do you find your EIN number? It should be pretty easy to locate, but here are your three best options.
- Your EIN confirmation letter
This may seem obvious, but check your email or files for the confirmation letter from the original EIN application you filed with the IRS. Your EIN number will be listed there. You may have received the confirmation via email, fax, or letter, so check another avenue if you can’t find a confirmation email.
- Other Offical Documents
Not everyone is an organizational mastermind, and starting a small business can be quite a chaotic environment. If you can’t track down your original confirmation letter from the IRS, you can still find your EIN number. The best way to do so is by checking old tax returns, tax notices, your business bank account and any business license or permits you’ve been granted.
- Call the IRS
Certainly the most daunting of the bunch, but if all other avenues fail, you can always call the IRS to get your EIN number. The IRS has a helpline specifically dedicated to this known as the Business & Specialty Tax Line, but this should be a last resort. Expect to be waiting for a long time.