Filling out an EIN application is one of the first steps to establishing a small business, corporation, or sole proprietorship.
An Employer Identification Number (EIN), sometimes called a Federal Tax ID number, is a nine-digit number assigned by the Internal Revenue Service (IRS) and used to identify different types of business entities in the U.S.
Depending on the type of business entity established, an EIN will grant certain benefits unique to the business type, and will allow you as an individual to separate your personal identity from some of the legal and financial responsibilities of the business—in this way, an EIN is like a Social Security number for your business.
Not all businesses or individuals establishing a business entity require an EIN application, but it’s important to know when and if you need one, as many business entities are legally required to apply for a Federal Tax ID.
Should You Complete an EIN Application?
There are different circumstances for which you will be legally required to fill out an EIN application.
Common circumstances include, but are not limited to:
- When/if you take on a single employee
- The establishment of either a corporation or a partnership
- A sole proprietors/individual wishes to obtain a bank account or credit in the name of the business
- In the event that income, taxes, other than wages are paid to a non-resident alien
- The establishment of a tax-deferred pension plan, also called a Koegh plan
- Business involvement with organizations that include trusts, IRAs, estates, non-profits, farmers cooperatives, and plan administrators
To learn more about EIN applications, like whether you should complete an EIN application or not, contact us today. You may also choose to complete an EIN application today, using our simplified online EIN application.