A Federal Employee Identification Number (EIN) is a unique number the Internal Revenue Service (IRS) assigns to most types of business entities for tax reporting and filing purposes. IRS-EIN-Tax-ID is an easy and secure way to apply for an EIN online through their secure website.
An EIN is required in the following circumstances:
- You have employees
- You operate your business as a partnership or corporation
- You pay excise, alcohol, tobacco, employment, or firearms tax
- You have a Keogh plan
- You withhold taxes on revenue, besides pay, paid to a foreign alien
- You are involved with a trust, estate, IRA, real estate mortgage investment conduit, non-profit, plan administrator program or farmers’ cooperative.
This nine-digit number is used by the IRS to track legal entities as well as their tax obligations. An EIN remains with a business for its entirety, unless the owner or business files bankruptcy, the secretary of state distributes a new corporate charter, or the business becomes a new type of entity.
As a business owner, an EIN is needed to apply for a business license, open a business bank account, and file your tax return. It is recommended to apply for one the moment you begin planning for your business. This is to ensure there will be no delays in obtaining the needed financing to operate the business, or obtaining the necessary licenses.
Reason for EIN When Not Required
Even if you are not required to obtain an EIN, it is a good idea to have one. Using an EIN instead of your Social Security number on tax forms or other important business documents can help you avoid identity theft.