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Hallie has always dreamed of starting her own vegan baking company. After years of learning and perfecting her recipes, she decides to open her own bakery in San Francisco, where she plans to sell plant-based brownies, cookies, ice cream, and fudge. The community has expressed a lot of interest in her idea, with many locals donating money to a GoFundMe set up for Hallie’s business. So, at this point, she has the storefront, the goods, and the cash to get up and running. The only thing Hallie is missing at this point are her employees. Hallie’s mentor, another business owner, has advised her that she needs to get an Employment Identification Number, or EIN. He explains that an EIN is like a social security number for a business, and that if Hallie wants to hire employees, she will need to get one. But Hallie does not know how to find her EIN number. She asks her mentor, who tells her that she can get an EIN through the IRS. Then, Hallie will be all set to start hiring employees.
Much like a person’s Social Security number, an Employer Identification Number (EIN) is a unique nine-digit number that the IRS uses to identify a business. It is possible to look up any business’ EIN because EINs are public information.
An EIN may also be known as a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). The EIN number is a way for the Internal Revenue Service (IRS) to identify businesses for the purpose of tax reporting.
A business owner will require an EIN in order to perform certain duties or actions related to running his or her business. These include the following:
A business will require an EIN in the following situations:
It is common for a sole proprietor to use his or her own personal social security number (SSN) for his or her company. Still, he or she must still get an EIN in order to hire employee or file excise taxes. For security and privacy reasons, it may also be a good idea to use an EIN rather than a personal social security number.
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.
So, how does one find their EIN?
For companies that are already in business but are unsure where to locate their EIN, there a few steps business owners can take.
It is also possible to search for the EIN of a different business. For this there are a few options.
Perhaps a business owner is just getting his or her company up and running. In this case, he or she may want to register for an EIN. The quickest and easiest way to get an EIN is to use the EIN Assistant on the IRS Website.
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
An EIN is not required for a self-employed individual. In this instance, he or she may use their personal social security number (SSN). That said, some self-employed individuals choose to apply for an EIN anyway in order to reduce the risk of identity theft. It is always possible, after all, that there could be a data breach, and someone could steal business as well as personal data in one fell swoop. It is altogether safer to keep business and personal finances separate.
A DBA is only a fictitious name, and therefore it does not affect whether a business needs or does not need an EIN. A sole proprietorship with a DBA will be subject to the same rules as a sole proprietorship without a DBA.
Regarding whether a sole proprietorship needs an EIN, the IRS has this to say:
“A sole proprietor without employees and who doesn’t file any excise or pension plan tax returns doesn’t need an EIN.”
That said, once a business hires employees or files excise taxes or pension plan tax returns, it will need to acquire an EIN from the IRS.
There is no difference between an Employer Identification Number (EIN) and a Taxpayer Identification Number (TIN). Both indicate the same nine-digit number that the IRS assigns a business for identification.
There is no difference between an EIN and a Federal Employer Identification Number (FEIN). A FEIN may also be called a Federal Tax Identification Number.
Learn more about: Business | Corporate | Employment Law
See all articles: Business | Corporate | Employment
See all articles: Business | Corporate | Employment