One of the first things you’ll need to start your business is an Employer Identification Number (EIN). Without it, you may not be able to open a bank account, hire employees, qualify for loans and more.
Your Employer Identification Number (EIN) is like your business’ Social Security Number. You won’t need it every day — but you will need it in some important places.
Without an EIN, you won’t be able to open a bank account, hire employees or qualify for loans. You also won’t be able to file taxes. So this nine-digit number is important to get a hold of as soon as possible.
It’s a crucial part of starting your business, and it only takes a few minutes to apply. You’ll find out how to do that below, along with how much it costs, when to apply for one and exactly the steps you need to take.
What is an EIN?
Your Employer Identification Number (EIN) is sometimes called your Federal Employer Identification Number (FEIN). It’s also interchangeable with Taxpayer Identification Number (TIN). Whatever you call it, it’s a nine-digit number you must apply for with the IRS after you register your business with your state.
It’s easy to apply for and it’s one of the most important steps in forming your business.
Why do I need an EIN?
Your EIN is required for some of the most important things you need to get your business up and running. Here are a few things you can only do once you have an EIN:
- Open a business bank account: You need a business bank account to keep your business expenses organized and your books clean. But you can’t open one without an EIN.
- Hire employees: Any business with employees is required to have an EIN. Even if you want to just hire one person, you still need an EIN.
- Run your payroll: You can’t pay those employees without an EIN, either. Whether you’re using software to run payroll or doing it on your own (which you shouldn’t), you need an EIN to do it legally.
- File taxes: If you file a business tax return, like a Form 1120-S or Form 1065, your EIN needs to be on there.
When do I need an EIN?
You’ll need your business registered before you apply for an EIN. The IRS will assign your EIN to your business entity, so there needs to be something there for them to match up. So the right time to apply for your EIN is after you register your business with your state by filing your Articles of Organization.
Steps to create your EIN
You can create your EIN in three easy steps. Just make sure to complete it only after registering your business with your state.
Step 1: Gather the necessary information
It’s important that you register your business with your state first because you’ll need that information to fill out your EIN application. Regardless which method you choose to apply, you’ll need the following information in front of you:
- Your business’ legal structure
- Your business’ tax structure
- What your business does
- Your business’ name and address
- Your reason for applying
Step 2: Apply online or file SS-4
It’s easier to apply for your EIN online than via mail — but both options are available. Only international applicants can apply for an EIN via phone.
- Online: You can easily apply for your EIN online at this link. As long as you have all the right information in front of you, it should take only a few minutes.
- File SS-4: You can complete Form SS-4 by mail to register for your EIN. Like the online application, it doesn’t take very long to complete. You can paper file SS-4, but you can’t e-file it.
Step 3: Submit your application
If you apply online, you’ll receive your EIN almost immediately. The IRS will let you know if they have any issues with your application.
How much does an EIN cost?
An EIN doesn’t cost anything to create.
However, starting a business costs money in other ways. You have to pay for filing with your state, certain permits, annual reports and more. But applying for an EIN doesn’t cost anything itself.
It will cost money if you hire another company to apply for you. Some business owners pass off the whole business registration process — which can include your EIN application, state filing, payroll setup and more — to another company to save time and avoid mistakes.
Where can I find my EIN if I lose it?
You don’t have to worry about having your business licenses revoked if you don’t memorize your EIN. There are a few ways to find it, according to the IRS:
- Save your EIN receipt when you receive it, and reference it when you need it
- Contact the bank you used to open an account with your EIN
- Reference your tax returns with your EIN listed
- Call the IRS’ specialty line at 800-829-4933
The bottom line
Applying for your EIN is a crucial part of starting your business.
There are three quick and easy steps to applying for your EIN: You gather your information, fill out the online application and submit it. You can also paper file Form SS-4 depending on your preferences.
If you don’t want to deal with all the stress and paperwork that comes with starting your business — including applying for an EIN — schedule a free introductory call with a member of our team today. DiMercurio Advisors can help you cut through all the red tape and get you closer to running the business of your dreams.