Getting an Employer Identification Number (EIN) from the IRS is a crucial step for businesses operating in the United States. This nine-digit number acts like a Social Security number for your business, allowing you to legally hire employees, open business bank accounts, and handle various tax obligations. The good news is, obtaining an EIN is absolutely free and can be done quickly online through the IRS website. This guide will walk you through the process of getting your EIN efficiently and correctly.
Who Can Apply for an EIN Online?
The IRS online EIN application tool is designed for convenience, but it’s important to ensure you meet the eligibility criteria before you begin. You can use the online tool if your business meets the following conditions:
- Principal Business Location: Your primary place of business must be located within the United States or U.S. territories.
- Responsible Party: You must be the responsible party controlling the entity or an authorized representative with the legal authority to apply. The responsible party is generally the person who ultimately owns or controls the entity, or who exercises ultimate effective control over the entity.
- Taxpayer Identification Number: You must possess a valid Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
However, there are situations where you cannot use the online tool. These include:
- Foreign Business Location: If your principal business is located outside the U.S. or U.S. territories, you’ll need to apply for an EIN via phone, fax, or mail.
- Applying with an Existing EIN: Government entities are the only ones permitted to apply for an EIN using an existing EIN.
What You Need Before You Start
Before you start the online EIN application, gather the necessary information to ensure a smooth process:
- Business Structure: Determine your business structure (e.g., sole proprietorship, partnership, corporation, LLC).
- Responsible Party Information: Have the SSN or ITIN of the responsible party readily available.
- Business Information: Be prepared to provide details about your business, such as its legal name, trade name (if applicable), principal business activity, and mailing address.
Step-by-Step Guide to Applying Online
The IRS online EIN application is straightforward. Follow these steps to get your EIN quickly:
- Access the IRS EIN Online Tool: Go to the official IRS website and navigate to the EIN section or directly search for “IRS EIN online application”. Ensure you are on the official IRS website (.gov domain) to avoid scams.
- Begin the Application: Click on the “Apply Online Now” button to start the application process.
- Complete the Application Form: You will be guided through a series of questions about your business. Answer all questions accurately and completely. The application is session-based and cannot be saved, so plan to complete it in one sitting.
- Review and Submit: Carefully review all the information you’ve entered before submitting your application.
- Receive Your EIN: If your application is approved, you will receive your EIN immediately online. You can then download and print your EIN confirmation letter (Form CP 575) for your records.
Important Considerations
- Time Limit: The online application session will expire after 15 minutes of inactivity. Be prepared to complete the process without interruptions.
- Daily Limit: You are limited to applying for only one EIN per responsible party per day using the online tool.
- Forming a Legal Entity: If you are forming an LLC, corporation, or partnership, it’s generally recommended to first form your entity with your state before applying for an EIN. This can prevent potential delays in your application.
- Availability: The online EIN application tool is available Monday through Friday, from 7:00 a.m. to 10:00 p.m. Eastern Time.
When Do You Need an EIN?
Understanding when you need an EIN is as important as knowing how to get one. Generally, businesses and organizations require an EIN in the following situations:
- Hiring Employees: If you plan to hire employees, you’ll need an EIN to report payroll taxes.
- Operating as a Corporation or Partnership: Corporations and partnerships, unlike sole proprietorships without employees, are required to have an EIN.
- Paying Business Taxes: If your business needs to pay sales tax, excise tax, or other business-related taxes, an EIN is necessary.
- Changing Business Structure or Ownership: Significant changes to your business structure or ownership might necessitate a new EIN.
- Administering Trusts, Retirement Plans, or Estates: Certain types of trusts, retirement plans, and estates require an EIN for tax purposes.
Once you obtain your EIN, remember your responsibility to file the necessary tax returns.
Alternative Application Methods
If you are ineligible to apply online or prefer other methods, the IRS offers alternative ways to apply for an EIN:
- Phone: For international applicants.
- Fax: Using Form SS-4, Application for Employer Identification Number.
- Mail: By mailing Form SS-4 to the IRS.
Remember, regardless of the application method, obtaining an EIN from the IRS is always free. Be cautious of third-party websites that may charge a fee for EIN application services, as these are unnecessary.
Stay Compliant with FinCEN
Certain companies, including corporations and LLCs, may also need to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Check if this requirement applies to your business to ensure full compliance.
Getting an EIN is a vital step for many businesses. By utilizing the IRS’s free online tool and understanding the requirements, you can obtain your EIN quickly and get your business operations running smoothly.
