You’ve heard time and time again that an EIN is essential for forming your business. But what exactly is an EIN, and how do you obtain one?
Understanding the EIN
EIN stands for Employer Identification Number, and is necessary to establish your business as a separate legal entity from yourself. Just as every U.S. citizen must have a Social Security Number, every business must have an EIN that identifies it as a unique entity. The EIN is often also referred to as the Tax ID Number, or TIN; some also say , though this is redundant when the N in EIN stands for Number.
Who Needs an EIN?
Anyone who intends to operate as a business can file for an EIN, though sole proprietors without employees aren’t required to do so. If you intend to hire employees even as a sole proprietor, though, you need to ; you will also need an EIN if you form a partnership or LLC, inherit a business as a sole proprietor, file for bankruptcy, or have a retirement plan as part of your business. Otherwise, sole proprietors can use their SSN, though an EIN may still be necessary when opening business bank accounts.
However, all other business types, including S-Corps, C-Corps, and LLCs, are required to have an EIN. Trusts and pension plans may also need an EIN to operate. Other instances requiring an EIN include acting as representative of an estate that continues to operate a business after the death of the owner.
Completing the EIN Application
To apply for an EIN, you must complete and submit the appropriate application form for the type of business you seek to establish. If you’re having difficulty making that determination, our wizard will walk you through selecting the proper business type with a few simple questions, then guide you through the application process. You’ll receive your EIN by email once the application has been filed, processed, and approved.
After You Have Completed the Application
Once you’ve submitted the application, you should get a confirmation from GovDocFiling within one business day. That means you might be waiting a little while if you send the application over a weekend or holiday when the offices are closed. For applications submitted after 3pm PST, processing will take until the next business day. Otherwise, email confirmations usually go out the same day.
If for any reason your EIN application is rejected, you will receive instructions that include steps to take to re-apply. Typically, rejections only happen for a couple of reasons:
If you fill out the application completely, most of the rejections are related to the name, which can be rectified easily enough. You’ll also get a refund, minus a $10 processing fee, so you can easily apply again once you have corrected the information.
How Long Until Paper Records Arrive?
While you will get an electronic notification of your EIN quickly, it can take up to 30 days for paper records to arrive from the IRS. This is because of the time it takes for the records to fully populate all the databases they need to be referred through, including the ones that process outgoing communications for companies. Very often, the wait time is less than the 30 day projection, but since it is influenced heavily by the workload the government experiences, it can change unexpectedly.
Applying for Your EIN
GovDocFiling makes the application process as smooth as possible, reducing the form to just the vital information the IRS needs so that you can fill it out efficiently. To get started, all you need to do is navigate to the application page and select the right entity for your registration needs. After that, fill out the information, pay the fee, and wait for your new EIN. You should hear from our team very quickly.