The EIN number - chances are, if you have a business operating in the United States, you have heard of an EIN number (also known as a FEIN - Federal Tax Identification Number). However, while you may have heard of an EIN - the real issue is whether you need one. Once a determination is made as to whether you need an EIN number, you can obtain one by filling out the EIN number application (Form Number SS-4) with the Internal Revenue Service.
What is an EIN Number?
It's a nine-digit number assigned by the IRS to all operating business in the United States. The number assigned will be unique to your business, similar to how a Social Security number is assigned to a person. In basic terms, your Social Security number identifies you, and your EIN number identifies your business entity.
How do you know if you need an EIN number?
The IRS has a list of questions to help you determine if you should apply for an EIN number. If you answer YES to any of them you should fill out an application for an EIN number:
- Do you have employees?
- Do you operate your business as a corporation or partnership?
- Do you file employment tax returns?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan (Note: This is a type of retirement plan)?
- Are you involved with either of the following organizations?
- Trusts (except certain grantor-owned revocable trusts.
- IRAs, exempt organization business income tax returns).
- Real estate mortgage investment conduits.
- Non-profit organizations.
- Farmers' cooperatives.
- Plan administrators.
How to Apply for an EIN Number
Applying for an EIN number is a relatively simple process - requiring you to fill out form SS-4 with the IRS. Many people decide to go about getting an EIN number without the help of a lawyer. However, although applying for an EIN number is not very difficult to do, you want to be sure everything is done correctly to avoid future problems that can be difficult and expensive to unravel. If you don't know exactly where to begin, a lawyer who specializes in setting up companies and filing all the necessary forms is a great place to start. At the very least, even if you decide to file an application on your own, having a lawyer take a look at the application before you send it out might be a good idea.
If you want to start the process of applying for your EIN number, please contact us. We would be happy to assist you with all of your legal needs for your business.
Julian Cordero is an Attorney, Music Producer, and Entrepreneur. Oh and he blogs too! Julian is licensed to practice law in New York and is the Managing Member of Cordero Law LLC, a New York City based law firm focusing on Business Law, Entertainment Law, and Intellectual Property.