Getting ready to start a new business this year? With any new business, there are probably quite a few regulatory and administrative items on your new business checklist – getting permits from the city and county, registering your business name and obtaining an Employer Identification Number, or EIN, from the IRS.
An EIN is a unique nine-digit number that identifies your business for tax purposes. Think of it as the business equivalent of a social security number.
As a business owner, you’ll need an EIN to open a business bank account, apply for business licenses and file your tax returns. An EIN is needed by any business that retains employees. However, non-employers are also required to obtain one if they operate as a corporation or partnership.
The easiest way to apply for your EIN is online through the IRS. As soon as your application is complete and validated, you’ll be issued an EIN. There is no charge for this service (beware of Internet scams that will try to sell you their EIN application services). You can also apply by fax or mail.
As your business grows and matures, you may choose to change its legal or ownership structure. For example, a sole proprietor may decide to incorporate or a partnership may be taken over by one of the partners and is operated as a sole proprietorship. In instances such as these, your business will need a new EIN. Information on how to create an EIN is available at IRS.gov.