Incorporation 101: Federal Employer Identification Number.
An Employer Identification Number (EIN) is used to identify a business for tax purposes with the IRS. An EIN is similar to a social security number for your entity. Every business, except for certain sole proprietorships that do not have any employees, should have EIN.
What Is Employer ID Number?
An Employer Identification Number (EIN) is used to identify a business for tax purposes with the Internal Revenue Service (IRS). An EIN is similar to a social security number for your business.
Every business, except for certain sole proprietorships that do not have any employees, should have such EIN. Certain nonprofit organizations such as churches, clubs, trusts, and estates, and others, must also have an EIN.
A business is required to obtain a Federal Employer ID Number if it hires employees or meets other IRS guidelines. In addition, banks usually require businesses to obtain an Employer ID Number prior to opening a business bank account.
EIN also known as the Tax Identification Number (TIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number. The EIN is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.
Reasons for Getting New EIN
When the structure of the business or the ownership changes getting new EIN is often required. For example, when you change the type of your entity from corporation to LLC you will need a new EIN. It is important to consult with your accountant if your company needs to get new EIN in case you change the structure of the business or if you buy an existing company.
When New EIN Is Not Required?
What If I Misplaced My EIN?
If you previously applied for and received an EIN for your business, but have since lost it, try the following actions to locate the number:
Can I Cancel My EIN?
Once an EIN has been assigned to a business entity it becomes the permanent Federal Taxpayer Identification Number for that entity. Regardless of whether the EIN was used or not, it is never reused or reassigned to another business entity.
The IRS cannot cancel your EIN. However, if you receive an EIN but later determine you do not need it (for example, the new business never materialized), the IRS can close your business account. The EIN will still belong to the business entity and can be used at a later date, should the need arise.
EIN vs. Social Security Number (SSN)
EIN is similar to SSN, however unlike SSN that is assigned to individuals, EIN is assigned to legal entities that act as employers (hence the name). Examples of such entities are: sole proprietors, corporations, LLCs, partnerships, non-profit organizations, trusts and estates, government agencies, certain individuals and other business entities.
Individuals who are employers may choose to either obtain an EIN or use their Social Security Number for the purpose of reporting taxes withheld on behalf of their employees.
Article Tags: Federal Employer Identification, Employer Identification Number, Social Security Number, Federal Employer, Employer Identification, Identification Number, Social Security, Security Number, Business Entity
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ABOUT THE AUTHOR
Alex Zehnbacht is an entrepreneur with over 8 years of experience in start-ups and business consulting and one of the founders of MyUSACorporation.com, an online business dedicated to help entrepreneurs with all their business filing needs. He has helped thousands of clients to incorporate their businesses, obtain EIN and various business licenses, and much more.