Published on: 07/2/21 12:09 PM
Last modified on: 04/21/22 10:16 AM
Although there are many reasons why your company may need an EIN (Employer Identification Number), usually it is because of an administrative reason. The primary reasons to have one is if your company has employees or conducts business in the United States. However, you may need one to open a US bank account or file sales and use tax returns.
What is an EIN?
EIN is an abbreviation for employer identification number and is assigned by the IRS (Internal Revenue Service) to companies. It is used primarily for companies to file income tax returns or remit and file employment tax returns. It is a tax identification number issued by the Internal Revenue Service when a company pays employees or conducts business in the United States. If you are a sole proprietor without employees, you will not need one. However, not every company that has an EIN will be required to file income tax returns or employment tax returns.
Do I Have to Get a Business Tax ID?
Any company that is doing business in the United States needs an EIN unless they are either a sole proprietor without employees or a foreign entity without a physical location. This is true if the company is formed in the US. Any company that plans on obtaining either a US bank account or a sales tax permit needs an EIN. If you control an estate or a trust, you will also likely need to have and EIN. Additionally, there are nearly two dozen other entity types that will need an EIN – churches, IRS’s, tenant association, and others.
To be clear, a foreign entity does not need to obtain an EIN if it does not have a principal place of business or physical business location – storing inventory in the United States does not count as having a physical location. An office or a retail outlet would count as a physical location. Often a foreign entity is confused about whether they need an EIN, and sometimes incorporate a business in the US, even though they may not have to do so. Foreign entities, however, will be required to have an EIN in order to be able to apply for sales tax permits in the various states, but having one simply because it is transacting business with US customers is not a reason.
How to Apply for an EIN
An EIN can be obtained at no cost from the IRS. However, only one can be obtained per day by the person responsible for the entity. An EIN can be started either online at the IRS website or by completing a form SS4 and either faxing it in or by mailing it. An international applicant can obtain an EIN by telephone. There are services that will obtain an EIN for you so that you will not have to do it yourself – but these services will likely charge a fee.
The easiest way to apply for an EIN is online using the IRS website — https://sa.www4.irs.gov/modiein/individual/index.jsp. Before starting, familiarize yourself with the information you need to answer questions. There is no way to save the information you add, so if need to determine what the correct answer is, or do not know the correct answer, you will have to start the application over. International applicants will have to apply by telephone.
The second easiest way to apply for an EIN is by telephone. It can be obtained by calling the IRS Business and Specialty tax line at 800-829-4933. If you are an international applicant, you can call the IRS at 267-941-1099. This is not a toll-free number.
Finally, the last way to apply for an EIN is using form SS4 which can be obtained through the IRS website — https://www.irs.gov/pub/irs-pdf/fss4.pdf
If your business is located in the US, or your legal residence in the US, the form can be mailed to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Or fax it to (855) 641-6945
If you are an international applicant, the form can be mailed to:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Or fax it to (855) 215-1627 within the US or (304) 707-9471 outside the US.
How Do I Find a Business Tax ID?
If you have lost or misplaced your EIN, you can take several steps to locate it. The IRS issued you a computer-generated notice as a confirmation receipt. The number should be listed on that. If you used the number to open a bank account, the bank should also be able to provide the number for you. If you filed a tax return – income tax or sales tax, the number should be available on the return, or in the case of sales tax, in your account information. Finally, you can call the IRS at 800-829-4933 7am to 7pm, Monday through Friday and they can assist you if you are the person authorized to receive it.