Understanding Business Tax ID Numbers
A Business Tax ID Number, also known as an Employer Identification Number (EIN) or Federal Tax Identification Number, is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS). Think of it as a Social Security number for your business, used for tax filing, banking, and other business operations.
Why You Need a Business Tax ID Number
Having an EIN is essential for several reasons:
- Tax Filing: Required for federal and state tax returns
- Business Banking: Necessary to open business accounts
- Employee Management: Required for hiring and payroll
- Business Credit: Helps establish business credit history
- Legal Requirements: Mandatory for certain business structures
- Financial Separation: Helps separate personal and business finances
Who Needs an EIN?
You're required to obtain an EIN if:
- You have employees
- Your business operates as a corporation or partnership
- You file employment, excise, or alcohol/tobacco/firearms tax returns
- You withhold taxes on income paid to non-resident aliens
- You have a Keogh plan
How to Apply for an EIN
Online Application
The fastest and preferred method is through the IRS EIN Assistant. This service is:
- Free of charge
- Available Monday through Friday, 7am to 10pm Eastern time
- Immediate - you'll receive your EIN right away
Alternative Methods
If you can't apply online, you can obtain an EIN by:
- Faxing Form SS-4 to (855) 641-6935
- Mailing Form SS-4 to:
Internal Revenue Service Attn: EIN Operation Cincinnati, OH 45999 - Calling the IRS at 267-941-1099 (for international applicants)
Required Information
Before starting your application, gather:
- Legal Name of the Business: The official registered name
- Trade Name: If applicable
- Business Address: Physical location
- Responsible Party: Name and SSN of person controlling the business
- Business Entity Type: Sole proprietorship, partnership, corporation, etc.
- Reason for Applying: Starting a new business, hiring employees, etc.
- Number of Employees Expected: Estimated workforce size
- Principal Business Activity: Main business purpose
After Obtaining Your EIN
Once you receive your EIN:
- Store the confirmation letter securely
- Add it to your business documents
- Use it to open a business bank account
- Include it on all federal tax filings
- Provide it to vendors for 1099 reporting
The IRS only allows one EIN per responsible party per day. If you need multiple EINs, you'll need to space out your applications.
State Tax ID Numbers
Remember that your federal EIN is separate from state tax ID numbers. You may also need:
- State Employer ID Number
- Sales Tax ID
- Seller's Permit
- State Business License
Contact your state's revenue department for specific requirements.
Common Questions
Can I Change My EIN?
Generally, an EIN is permanent. However, if your business structure changes, you may need a new one.
Is There a Fee?
The IRS does not charge for EIN applications. Beware of third-party services charging fees.
How Long Does It Take?
Online applications provide immediate EINs. Mail applications can take up to four weeks.
For the most current information and resources, visit the IRS website.