Businesses operating in the United States or its territories can obtain a nine-digit employer identification number (also called an EIN) through the Internal Revenue Service (IRS). The IRS uses EINs to identify business taxpayers.
You must have an EIN if you have employees, operate as a corporation or partnership and withhold taxes on income (other than wages) that are paid to non-resident immigrants. Your business must also have an EIN if you file tax returns for employment, excise, or alcohol, tobacco and firearms. The IRS has more information about who must have an EIN on its website.
However, there are a couple of other reasons you need an EIN, even if you are a sole proprietor. An EIN is necessary for:
- Hiring employees
- Using 401(k) and Keogh retirement plans
- Filing for bankruptcy
- Forming partnerships and LLCs
How Do I Get an EIN?
It is relatively simple to obtain an EIN from the IRS, and you can apply for one on the IRS’ website. You will need the following information to apply for an EIN:
- You will need the legal name for your business or trade name (if applicable). If you work for yourself, you need to apply with your legal name. In addition, you must provide the address information for your business and your business’s start date.
- The IRS needs information on business activities and the reason you are applying for an EIN.
- You must apply with your Social Security number.
- For LLCs, you must provide the IRS with the number of members in your business.
- Due to recent cybersecurity changes, the IRS made recent revisions to the application process. You can read about them on the IRS’ website.
Once you have the necessary information, you can visit the part of the IRS website where you can apply. Keep in mind, you must complete the application process in one session. You cannot pause the application and return later. The application process resets after 15 minutes of inactivity.
You can also apply for an EIN through the mail, but this is not recommended. Mail may not only get lost, applying through the mail stretches out the amount of time it takes to obtain an EIN.
One More Thing: Don’t Forget to Keep Your Information Secure While Applying!
There is one more very important piece of information that you should take into account. If you are going to apply for an EIN, then you should take cybersecurity very seriously. Many businesses in Redwood City and Palo Alto work in or with sensitive industries. Only apply on a secure network. Run a full virus and spyware scan before you begin your application.
Hackers may attempt to steal your information to commit identity theft, intellectual property infringement, monetary theft, or simply to cause as much damage to your data as possible. If you work with defense, energy, tech or financial matters, then cybersecurity is even more important because you are an attractive target. Always be wary of suspicious emails, even ones that look like they came from the IRS.
There is a lot of good information online about what cybercriminals can do if they steal your EIN information. You can learn more about risks with EINs if you are interested.
About Our Redwood City Business Law Firm
Winghart Law Group, Inc. is a Redwood City business law firm that takes clients in Redwood City, Palo Alto and the surrounding areas. You may call us for a consultation by dialing (650) 456-2925. In addition, you can also use our online contact form to schedule a consultation.