California EIN Number – Who What When Where Why & How

A California Federal Tax ID Number may also be referred to as an Employer Identification Number (EIN) or a Federal Tax Identification Number.

Brad Nakase, Attorney

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Sebastian cannot wait to open his seafood restaurant in Redondo Beach. He has been going fishing with his dad on the pier ever since he was a boy, and finally he will get to share his passion with locals. After months of hard work, Sebastian has most aspects of his business set up. He has the restaurant all set up and his vendors ready and waiting. Now all he has to do is create a business account at the bank and hire employees to prepare and serve his tasty dishes to customers. However, Sebastian knows that in California, he needs to have an EIN number in order to create a business bank account and hire employees. So, Sebastian goes online to the IRS website and files for an EIN. Once he receives it, he is able to open his account at the bank and hire the best cooks and servers Southern California has to offer.

What is a California EIN Number?

A California Federal Tax ID Number may also be referred to as an Employer Identification Number (EIN) or a Federal Tax Identification Number. An EIN is a unique, nine-digit number that the IRS assigns to a business for tax reasons. In addition to businesses, an EIN is also assigned to nonprofit organizations, trusts, and estates. Much like a social security number (SSN) is attached to an individual, an EIN is a way to easily identify a business entity.

Most businesses and organizations require a California Tax ID. A business will need an EIN if it meets the following criteria:

  • Has W-9 employees in California
  • Operates a corporation or partnership in California
  • Runs a trust, estate, or nonprofit organization in California
  • Files tax returns for employment, excise or alcohol, tobacco and firearms
  • Opens a California business bank account

Do Sole Proprietorships Require an EIN?

It is not unusual for a sole proprietor to use his or her own personal social security number (SSN) for his or her company. That said, he or she should still get an EIN in order to hire employee or file excise taxes. For security and privacy reasons, it would also be a good idea to use an EIN rather than a personal social security number. Data breaches happen, and keeping personal and business finances separate is good practice.

Similarly, single-member limited liability companies (LLCs) should get an EIN number and operate under it in order to maintain their liability status, or corporate veil.

Information Needed to Complete a Tax ID Application

A business owner can file online to receive an EIN from the IRS. To receive an EIN, the following information is required.

  • Full legal name
  • The responsible party’s legal name and social security number
  • The responsible party’s contact email and phone number
  • The business’ physical address

It is necessary to start one’s business prior to getting an EIN. This is because the IRS will ask for the formation date of the business as well as the legal business name.

It is also possible to file for an EIN by fax or mail. To do this, a business owner should fill out a Form SS-4. If a business owner is submitting this form by fax, then he or she should send the application using this fax number: (855) 641-6935. If a business owner is applying by mail, then he or she should send the application to:

Internal Revenue Service

ATTN: EIN Operation

Cincinnati, OH 45999

If an EIN is Lost or Needs Verification

Authorized representatives of a company may call the IRS to confirm or verify a business’ EIN. A business owner automatically qualifies as an authorized representative. Other authorized representatives of a business include company officers, partners, sole proprietors, and trustees or executors of estates.

Luckily, the verification process is not complicated. The authorized representative will call the IRS at (800) 829-4933. After checking some identifying information, the IRS representative will provide the EIN number over the phone.

It is also possible to verify an EIN via other sources. It is true that an EIN is private information, but employers will usually be okay with confirming an EIN if requested. An EIN number is put on payroll checks and provided on contractors’ 1099s. An incorrect EIN is a problem. It can cause the IRS to reject personal or business tax returns. It can also lead to the IRS refusing requests for other information due to data inconsistencies. If this happens, then verifying an EIN is necessary to prevent understating and overstating income.

One can also verify an EIN by running a credit history. If a person has a company’s EIN and is authorized to perform a credit check, then the credit report will confirm the name of the business and the address associated with the EIN.

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