What is a Federal Tax ID Number (EIN)?
A federal tax ID number, also known as an EIN, identifies your company with the IRS for tax purposes. It is a nine-digit number provided by the IRS to track businesses that must submit different tax forms.
How to Obtain an EIN
To apply for an EIN, you can file Form SS-4 online or by mail, which can be found on the IRS website. Applying online is the easiest and most common way to get an EIN. An EIN is essential for businesses that hire employees, pay taxes, and have a business bank account.
Benefits of Having an EIN
Having an EIN is crucial for various business operations, including opening a bank account, applying for business permits, and complying with tax identification requirements. It is similar to a social security number for individuals.
Cost and Renewal of EIN
Getting an EIN is a free service offered by the IRS. The IRS does not require EIN renewal, except in special circumstances. You must file income taxes for your company annually using the assigned EIN.
Do You Need an EIN?
Not every business needs an EIN. A sole proprietorship or single-member LLC with no employees can use an SSN on paperwork instead. You should apply for an EIN if your business hires employees or must file specific tax returns.