An employer identification number (EIN) is a number assigned uniquely to your business by the Internal Revenue Service (IRS). The nine-digit number appears as this format: 12-3456789. Social security numbers (SSNs) also have nine digits but their format is distinguishable from EINs because they have a different placement of hyphens.
1. Question: Is an Employer ID Number the Same as a Tax ID Number?
Yes, an EIN is the same as a taxpayer identification number (TIN). In some instances, such as a sole proprietor with no employees, the social security number is used as the TIN.
2. Question: What Is the Purpose of an Employer ID Number?
An EIN for a business serves a purpose similar to a social security number for an individual. An EIN precisely identifies your business on business permits, business licenses, tax returns, and any applications or forms requiring an IRS identifier. Opening a business bank account with your EIN enables you to further separate your personal and business expenses.
3. Question: Are Any Entities Barred From Applying for an EIN Online?
No. If the location of the principal agency, office, or business is in the United States or a U.S. territory, you can apply for an EIN online. However, the owner, grantor, general partner, or principal officer must have a valid TIN, SSN, EIN, or Individual Taxpayer Identification Number to use the online application.
4. Question: How Do I Apply for an Employer Identification Number?
You can apply for an EIN using one of these three methods:
- By Mail or Telephone: To obtain an EIN, you need to complete the Application for Employer Identification Number (Form SS-4). After you have prepared the form, you can acquire an EIN by phone or mail.
- Through Your State Office: Many states engage in the Fed-state Federal Employer Identification Number program. This enables you to apply at your state office directly.
- Online: You can apply online for an EIN. Once the application has been finished and received successfully, an EIN will be issued.
5. Question: Now that I have My EIN, When Can I Use it to Make Tax Deposits?
The IRS enrolls you automatically in the Electronic Federal Tax Payment System (EFTPS) based on the information you include on your application or if you indicate you have, or will have, employees. The system facilitates depositing your payments online or by phone. You will receive an EFTPS enrollment confirmation, a personal identification number (PIN), and comprehensive instructions within a few days in the mail. However, you will need to wait until you receive your EFTPS confirmation and PIN before you can deposit a payment electronically. The U.S. Department of Treasury provides the EFTPS as a free service to enable business and individual taxpayers to deposit their federal tax payments over the phone or online. You can enter your tax payments 24 hours a day, seven days a week using the automated voice response phone system or the secure government website.
6. Question: Does the IRS Accept Symbols as Part of a Business Name?
No. The only characters that IRS systems can support in a business name include the following:
- Alpha: Letters A through Z
- Numeric: Numbers zero (0) through nine (9)
- Hyphen: The hyphen symbol (-)
- Ampersand: The ampersand symbol (&)
If your legal business name contains any characters or symbols other than those listed above, you will need to decide how best to enter your business name into the online EIN application. For instance, you can simply spell out the symbol or character.
The majority of small business owners in the private sector have sole proprietorships. Although this kind of business formation does not always require an EIN from the IRS, it is still a wise idea to obtain one if you plan to hire employees for your business.
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