What is an EIN Number & Why do I Need it?

Dear M &M: What is an EIN number and do I even need one?

–Dorothy

Dear Dorothy:

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number. It is a nine digit number the IRS uses to identify tax accounts of a business entity. Generally, businesses need an EIN.

If you have employees, operate as a corporation or partnership, file tax returns dealing with employment, excise, alcohol, tobacco or firearms. If your organization is involved with estates, Keogh plans, IRA’s, Exempt Organizational Business Income Tax Returns, non-profit or farmer’s cooperatives.

Generally most banks want an EIN number to open a business checking account. It is a free service offered by the IRS and one can apply online at https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online or by fax to the following number (859) 669-5760 once you have completely filled out form SS-4 which can be found at https://www.irs.gov/pub/irs-pdf/fss4.pdf.

International applicants may call 267-941-1099 (not a toll-free number) 6:00 a.m. to 11:00 p.m. The preferred method is to go online and fill out an application. The online application process is available for all entities whose principal business, office or agency, or legal residence (in the case of an individual), is located in the United States or U.S. Territories.

The principal officer, general partner, grantor, owner, trustor etc. must have a valid (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application. –IRS.

Remember this is a free service beware of web sites out there charging a fee for this service. There is a limit of one EIN number issued to responsible party per day. As always check with your accountant, CPA or attorney.

-M&M

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