Unlike a SSN, an EIN is not considered sensitive information and is freely distributed by many businesses by way of publications and the internet. Your Employer Identification Number (EIN) serves multiple purposes. It allows your business to identify itself on tax returns and other government forms. It helps distinguish you from any other entity purpose of ein number filing taxes in the US that happens to have the same name as your business. It also allows you to open bank accounts and get credit cards in your business’s name without having to use your social security number. You only need an EIN number for businesses structured as single-member LLCs if you have employees or excise tax liability.
The federal government uses EINs to track companies and individuals for tax purposes, so every business must have one. If you are starting a business, you will be required to register with the IRS. If you are already in business, you will need an EIN if you have employees or if you wish to apply for a federal tax exemption.
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Many sole proprietors and single-member LLCs aren’t required to have an employer identification number if they don’t have employees. Instead, they can generally use their Social Security number or Individual Taxpayer Identification Number when filing their business taxes. All businesses are required by law to report certain information to the IRS to comply with relevant tax laws. This information https://www.bookstime.com/articles/in-kind-donations includes the company’s income, expenses, assets, and liabilities. Although several types of businesses, such as corporations and partnerships, most small businesses operate as sole proprietorships under Subchapter S of Chapter 1 of the Internal Revenue Code. An Employer Identification Number, or EIN, is a number assigned by the IRS to identify a business entity operating in the United States.
If you own a single company that has three business locations, each operating under a different DBA, you only need one EIN. For tax purposes, the IRS cares about the structure of the company, what taxes are withheld from employees and what taxes the company pays. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer’s fax number is provided, a fax will be sent back with the EIN within four (4) business days. An employer identification number (EIN) is a unique nine-digit number issued by the Internal Revenue Service that identifies businesses for tax purposes. It serves a similar purpose as a Social Security number does for an individual.
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The numbering systems for the two types of numbers are different yet similar. The Direct File pilot is currently in the internal testing phase and will be more widely available in mid-March. Taxpayers can get the latest news about the pilot at Direct File pilot news and sign up to be notified when Direct File is open to new users. You will not be required to obtain a new EIN if any of the following statement is true.
If you are unfamiliar with the Online EIN application, you may find this section helpful in answering your questions. When you do have a choice (as in a Sole Proprietorship with no employees), the advantages of using the EIN typically outweigh the disadvantages. Personal protection alone is a strong reason to use an EIN over an SSN. Like your social security number, your Employer Identification Number can be used (generally in combination with other information) to commit identity theft and fraud. You can use your EIN to apply for various permits and licenses that are required by your business. Prior to 2001, the first two digits corresponded to the geographic area of the business’s home office.
