An EIN is short for Employer Identification Number.
An EIN is a number assigned to you by the Internal Revenue Service (IRS) for business structures and identification purposes. The IRS uses this unique number to track tax obligations of businesses.
An EIN is also used when opening a business bank/credit account, when applying for business licenses, filing electronic tax returns and payments, and filing tax reports. The simplest way to apply for an EIN number is IRS EIN Tax ID website.
Following is a step-by-step guide enlisting the essential information required for the EIN application process.
Go to the official IRS website and start off your application with the ‘Begin Application’ button.
Learn about the Legal and Tax structure of your business entity.
This step is crucial as to the differing rules and regulations of each type of legal and tax structure. The tax reporting requirements also vary across these structures.
The official website provides a glossary of technical terms related to the application. Normally, the technical words are highlighted in blue and you can click to open the link in a new window. Going through these definitions will not hamper the progress of your application. After you are done with indicating the type of tax and legal structure of your business entity, proceed with ‘Continue’. The application then routes you to a page that explains and outlines your choice.
State the reason for your EIN Request.
When asked by the online application the reason for EIN request, you will find a list of choices to check. Generally, you need to pick the first option.
a) Started a new business.
b) Hired employees.
c) Banking Purposes.
d) Changed Type of Organization.
e) Purchased Active Business.
Identify and Describe a Contact Person for the Business
The official application requires you to designate a contact person or in technical terms ‘responsible party’. The IRS considers the designated contact person or individual to be responsible for tax matters. If the IRS communicates with the business, all sorts of communication are addressed in care of the contact person or individual.
Provide the Business Location
A physical address is mandatory to provide in the application. Irrespective of your entity type or tax structure – address must be inside of the U.S or U.S territories. A landline phone number registered in the name of the business is essential to be provided along with the details of the location.
The IRS website system only allows for 35 characters in the street address line, so make sure to enter the most important address information. Then your address is run through background checks and validated through the United States Postal Service’s Database and asks for changes if necessary.
Provide Legal and Trade Name information about your Business
When asked by the application, you have to enter the name of the business, the trading or ‘doing business as’ name, the country or state where the physical address is located and the start date of your operations. The name provided in the fields should match and validate the name registered in the articles of association and memorandum of association.
State if the business is subject to Federal Excise taxes
After you’re done filling the above areas of information, the official application will ask a plethora of questions about vehicles, gambling, alcohol, tobacco, firearms, and federal excise returns. These questions won’t apply to the general public.
State the Nature of your Business
Choose a category that best classifies your business. If you cannot find the appropriate category for your business, describe your business in the ‘Other’ option and list down the essential information about your product(s) or service(s).
Mention your delivery choice of the confirmation letter.
You can either receive the confirmation letter via mail or e-mail. The soft copy of the letter is in .pdf format and can be viewed in the Adobe Reader software. If you want the letter to be posted to your address, it may take up to 25 business days.
Verify your information.
The last page of the application produces a summary of the application. Print the page and proofread for errors. If the information is correct, click the ‘submit button’ to get an EIN – may take up to 2 minutes. If the summary has errors, redo the application process from the start. The unique prefixes of 20 and 26 are identified to be issued through the online process.
In case you forget your EIN, call (800) 829-4933 and speak to the IRS employee for further assistance.
Contributor’s post at SylvianeNuccio.com