A business needs an EIN in order to pay employees ein number purpose and to file business tax returns, as well as to open corporate accounts with financial institutions such as banks, credit unions, and brokerage houses. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc. a business must obtain an EIN. This applies to business with no income, which are not exempt from filing federal income tax returns.
Is an EIN necessary for my business?
While an EIN is a unique number for a business, a TIN can refer to a variety of identification numbers used for tax purposes by individuals and entities. Think of an EIN as a social security number but for your business. It is https://thesunshinetribe.com/what-does-it-mean-to-be-paid-in-arrears/ a 9-digit identification number and all businesses in the US need to have an EIN before they can begin operations.
Apply by fax or mail
- It is sometimes referred to as a federal tax ID number, federal employer number, and a few other names.
- Many aspects of tax collection need attention before forming a new business.
- Not every business needs an EIN, but for many, it’s an important step to staying compliant and organized.
- First of all, most banks require an EIN to open a business banking account for you.
- However, you might want to consider getting one even if you don’t need to.
This section will provide detailed instructions and informative guidance on the process of applying for an EIN online. For applicants preferring mail or fax methods for EIN application, submission of Form SS-4 retained earnings balance sheet to the IRS is mandatory. The processing timeframe for an EIN application received by mail is four weeks, while fax submissions can take up to two weeks. Please ensure to include a return fax number when faxing the form.
Alternatives: Applying via fax, mail, or phone
There is a widespread belief that the IRS charges for issuing an EIN. Be cautious of services charging for an EIN; you can easily apply for it yourself. Please note that the online application system is available only from Monday to Friday, 7 a.m.
How EINs Work and Their Main Functions
Secondly, if you’re planning on hiring part- or full-time employees, you’ll have to apply for a tax identification number. First of all, you’ll need an EIN to set up a payroll, so the IRS can track your taxes for it. Secondly, your employees will need to file their taxes separately under the LLC’s 1040 form, and they’ll need your EIN for that too. Now that you know the long and short answer to the “What is an EIN number? ” question, we can explain why having one brings many benefits even if you don’t need it. First of all, most banks require an EIN to open a business banking account for you.
