What is an Federal Employer Identification Number?

Before we even get into the process of acquiring a Federal Employer Identification Number (commonly known as “EIN” or “FEIN”).   Do you have a social security number? Of course, you do if you are trying to set up a business in the United States. Well, think of your Federal Employer Identification Number, as a social security number for businesses. Similar to a social security number, an EIN is primarily used by the Internal Revenue Service (IRS) to assess and track your taxation responsibilities required as a business owner.  An EIN is required to state most businesses in the United States, with the exception of a sole proprietorship. A sole proprietorship is the only business entity that simply requires your social security number to get started.

 
Now that we have thoroughly explained what an EIN is and how it is used by the IRS to determine tax liability of businesses, we can move into the 5 simple steps to acquire and EIN.

Step 1. You must determine your eligibility.   There as several limitations to acquiring and EIN.  First, your principal business must be located in the United States or US Territories. Second, The person applying online must have a valid Taxpayer Identification Number (TIN). Valid TINS would include a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN) or Employer Identification Number (EIN). Third, several years ago the IRS limited the acquisition of EINs to 1 per day for every person designated as the responsible party. (The EIN application asks for the name of the responsible party for the EIN.  Any person designated as the responsible party can only acquire on EIN per day.)

Step 2. Go the IRS website and complete the online application (Form SS-4).  This online method is the fastest way to acquire an EIN. The EIN is provided immediately after completing the application.  However, you can also acquire an EIN by fax, mail (snail mail) or telephone (reserved for international applicants). Again, the online application is the fastest way of acquiring the application.  

 
Be prepared to complete the application in one sitting.  You will not be allowed to save the application and return to it at a later time. In addition, you should gather the necessary information to complete application.  If the application is idle for more that 15 minutes, it will be cancel. You will then be required to complete a new application.

You should have the following information at hand.:

• Legal Name of the Entity (and Trade Name if using a DBA – Doing Business As)

• Mailing/ Physical Address

• Responsible Party

• Your SSN, ITIN or EIN

• Type of Entity (ie:  LLC, S Corporation, Partnership, etc.)

• Reason For Applying

Step 3. Submit your application and Voila!  You will have successfully registered your business with the IRS.  Your EIN will be provided to you in formal IRS letter generated electronically.  NOTE: Be prepared to print (or save to your desktop) the IRS letter designating your EIN.  If for some reason you are not able to save or print the IRS letter, you can contact the IRS to have a copy mailed to your business address.

Best of luck your new business!!  If you need any legal services, please feel free to contact our office at info@lawdlf.com

 
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