It can be confusing to understand when to use an EIN. However, we’ve simplified it for you. Your company must obtain an EIN if any of these statements apply to it:
If any of these are relevant to your business, you’ll want to complete an online tax ID application.
Other Reasons for Getting an EIN
Even if your business doesn’t meet any of the requirements listed above, you may still want to submit an EIN tax form to GovDocFiling. Sole proprietors and single-member LLCs may still need to get an EIN for the following purposes:
Using your Social Security number for company purposes may also make you more vulnerable to identity theft. Even if you are not required to get an EIN, you may want to apply for an EIN for a sole proprietorship just in case. If you’ve ever wondered how to use an EIN, now you know they can be used for a variety of tasks.
How to Get an EIN
Applying for a business tax ID can be done in only a few minutes and you’ll receive your EIN in an hour* or less. All you need to do is prepare business details including the name, mailing address, number of employees, type of business structure, and responsible party.
Using the EIN for Business Records
Your EIN is used in a variety of ways, but the specifics depend on your company structure to some degree. Common uses for the EIN that apply to companies regardless of their structure or business format include many of the record-keeping steps necessary to employ people and provide them with benefits. You will need to use your EIN to:
Why do Banks Require an EIN?
The employer identification number was designed to make tracking tax obligations and payments possible, and financial institutions have to create tax reporting documents for their clients’ accounts. This is true for all interest-bearing accounts above a certain value, all business accounts, and some loan accounts. Additionally, they often have reporting requirements for larger bank transactions, and an EIN on a business account helps with that obligation.
Banks also tend to require consumer clients to use a Social Security number for these same reasons, and the EIN is the tax tracking number that businesses have at their disposal as a substitute for that requirement. It makes a lot of sense that banks would require it on accounts and loans that do not belong to individual people considering that information.
Applying for Your EIN Online
When you apply for your EIN online, you have the opportunity to get confirmation of your new tax ID number within a business day*. That means you’ll be able to move forward with everything you need to do to get your operation up and running efficiently. It might take a couple of weeks to a month to get the certified notice of your EIN, but with the online confirmation, you can still get your number and put it to work quickly.
Contact a GovDocFiling representative today if you have questions. Emails are answered promptly.
*Most EINs are processed same or next business day, unless bundled with state formations, processing times will vary.