The Employer Identification Number (EIN), Federal ID Number or Tax IDNumber (TIN) is used to identify a business entity. Each business entity has a unique EIN. One way to look at an EIN is like a Social Security Number (SSN) for a business. An EIN is one of two primary Taxpayer Identification Numbers (TIN); the other is a Social Security Number.
In our experience, third parties including vendors, customers and other partners perceive that you and your business have greater credibility and are more professional when you have an EIN. We use our EIN on our customer invoices; we believe that this says we comply with the law and will declare the sales revenue you pay us.
The EIN is a nine-digit number that IRS assigns in the following format: XX-XXXXXXX.EIN is used to identify the tax accounts of employers and certain others who don’t have employees. However, for employee plans an alpha (for example, P) or the plan number may follow the EIN.
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You need an EIN when you…
• Have employees. • Operate your business as a corporation or a partnership. •File any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms. • Withhold taxes on income, other than wages, paid to a non-resident alien. • Have a Keogh plan. • Involved with any of the following types of organizations:
• Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns • Estates • Real estate mortgage investment conduits • Non-profit organizations • Farmers’ cooperatives, and • Plan administrators (this typically applies to pension and other employee benefit plans).
How the IRS Uses Your EIN: The IRS uses EINs to identify taxpayers that are required to file various business tax returns.
Employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities use EINs.
In particular, EINs help ensure that a taxpayer’s information gets properly routed to their files and records and the IRS (Internal Revenue Service) and other taxing authorities properly apply payments to the taxpayer’s account and issue refunds to the right taxpayer.
Be sure to use your EIN on all of the items that you send to the IRS and the Social Security Administration.
EIN becomes your permanent number for your business, similar to your Social Security Number and you can use your EIN immediately for most of your business needs including: opening a bank account; applying for business licenses; and filing a tax return by mail.
Timing of New EINs and Effective Dates. Even though helpful professional small business advisors can usually obtain your new EIN in just ten (10) minutes and the EIN becomes effective immediately, it often takes the IRS up to two weeks before your EIN becomes part of the IRS’ permanent records.
In other words, it takes time for the IRS to work your [a new] EIN through the IRS’ systems, records and databases. So, be sure to leave ample time(advance notice) before you file an electronic tax return, make an electronic payment to the IRS or pass an IRS Taxpayer Identification Number matching program.
With just a few clicks and supplying some key information, professionals can obtain an Employer Identification Number (EIN) right away,usually within 10 minutes. Then you’re ready to go.