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If you are planning to start a business, chances are you have heard about an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify businesses for tax purposes. It is often referred to as a business’s social security number.
Obtaining an EIN is a crucial step in establishing your business’s presence and ensuring compliance with the IRS. In this article, we will provide you with a step-by-step guide on how to obtain your EIN.
Step 1: Determine your eligibility
Before applying for an EIN, make sure you are eligible. You can apply for an EIN if:
1. You have a valid Taxpayer Identification Number (SSN, ITIN, or EIN of an existing business)
2. You are the responsible party for the business (owner, partner, or corporate officer)
3. The business is located in the United States or its territories
4. Your principal business is not a trust, estate, or nonprofit organization
Step 2: Gather your information
To complete the application, you will need the following information:
1. Legal name of the business entity
2. Trade name, if applicable
3. Mailing address
4. County and state where the business is located
5. Name, social security number, and contact information of the responsible party
6. Type of business entity (sole proprietorship, partnership, corporation, etc.)
Step 3: Decide on the application method
The IRS provides three ways to apply for an EIN: online, by mail, or by fax.
Online application (recommended): Visit the IRS website and navigate to the EIN Assistant. Complete the online form, providing all the necessary information. Once submitted, you will receive your EIN immediately.
Mail application: Download Form SS-4 from the IRS website and fill it out. Mail the completed form to the appropriate mailing address listed on the form. It may take up to four weeks to receive your EIN by mail.
Fax application: Fill out Form SS-4 and fax it to the appropriate fax number listed on the form. You will typically receive your EIN within four business days.
Step 4: Complete the application
Regardless of the application method chosen, you will need to provide the required information accurately and comprehensively. Double-check all the information to avoid delays or rejection.
Step 5: Understand special considerations
Some business types or circumstances require additional steps in the application process. For example:
1. If you are applying as a sole proprietorship, you have the option to use your social security number instead of an EIN. However, using an EIN is generally recommended for security and privacy reasons.
2. If your business has changed its legal structure (e.g., from sole proprietorship to partnership), you will likely need to obtain a new EIN.
3. If your business is acquired by another entity, the acquiring entity may need a new EIN.
4. Non-U.S. residents without a Social Security Number can apply for an Individual Taxpayer Identification Number (ITIN) before applying for an EIN.
Step 6: Safeguard your EIN
Once you receive your EIN from the IRS, it is essential to safeguard it. Treat your EIN as sensitive information, similar to how you would protect your social security number. Avoid sharing it with unauthorized individuals or entities.
In conclusion, obtaining an EIN is a critical step in establishing your business’s identity for tax purposes. By following the steps outlined in this article, you can navigate the process smoothly and ensure compliance with the IRS. Remember to double-check all the information before submitting your application and protect your EIN once obtained. With your EIN in hand, you are now ready to tackle the exciting journey of entrepreneurship.
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