How To: Get an EIN

by: | ChooseWhat.com

Get an Employee ID Tax NumberAn Employer Identification Number (EIN) is necessary to open a bank account, file taxes, get a credit card, and set up other important business accounts.

What is an EIN?

An Employer Identification Number (EIN) is like a social security number for a business. Anything that you do as an individual that requires your social security number (e.g. report income to the government, open a bank account, get a credit card, etc.) requires an EIN to do as a business.

Do I need an EIN?

If you’re a sole proprietor or a single-member LLC, you can use your social security number instead of an EIN.

If you have a business with multiple owners, then you'll need to get an EIN in order to:


Before you get an EIN, you should:

  • Assemble the necessary information to apply for an EIN.

    • Business Name
    • Physical Address and Business Mailing Address
    • Type of Business Entity (e.g. LLC, Corporation, etc.)
    • State in which your corporate documents are / will be filed
    • Start date of your business
    • Social Security Number of a responsible individual for your business (or the EIN of an existing business that acts as the responsible party for your business.)
  • Have access to a computer with Adobe Reader installed

    If you wish to receive your confirmation letter online, you will need software like Adobe Reader in order to view the confirmation.


Application for Employer Identification Number

Fill out the IRS application for an EIN.

It should take 15 minutes, and you’ll get your EIN instantly when you’re done.

When can I use my EIN?

This EIN is your permanent number and can be used immediately for most of your business needs, including:

  • Opening a bank account
  • Applying for business licenses
  • Filing a tax return by mail

However, it will take up to two weeks before your EIN becomes part of the IRS's permanent records. You must wait until this occurs before you can:

  • File an electronic return
  • Make an electronic payment
  • Pass an IRS Taxpayer Identification Number matching program

Renew your EIN when it becomes necessary.

Some changes related to your business will require you to obtain a new EIN. The following is the IRS list of all of the instances that require a new EIN.

Sole Proprietors

You will be required to obtain a new EIN if the following statements are true:

  • You are subject to a bankruptcy proceeding.
  • You incorporate.
  • You take in partners and operate as a partnership.
  • You purchase or inherit an existing business that you operate as a sole proprietorship.

You will not be required to obtain a new EIN if the following statements are true:

  • You change the name of your business.
  • You change your location or add other locations.
  • You operate multiple businesses.

Limited Liability Companies

You will be required to obtain a new EIN if the following statement is true:

  • A corporation files papers with the state to convert to an LLC and will use the default classification of partnership. (The corporation is treated as if it has liquidated in this case.)

You will not be required to obtain a new EIN if the following statements are true:

  • A corporation files papers with the state to convert to an LLC and will elect via Form 8832 to be taxed as a corporation.
  • The number of members in the LLC changes from more than one member to a single member.
  • The number of members in the LLC changes from a single member to more than one member.
  • A sole proprietor files papers to become a state recognized entity, organizes as an LLC, and will file Form 8832 or Form 2553 to elect to be treated as a disregarded entity or taxed as a corporation or small business corporation.

Partnerships

You will be required to obtain a new EIN if the following statements are true:

  • You incorporate.
  • Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
  • You end an old partnership and begin a new one.

You will not be required to obtain a new EIN if the following statements are true:

  • The partnership declares bankruptcy.
  • The partnership name changes.
  • You change the location of the partnership or add other locations.
  • A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).
  • 50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).
  • You operate multiple businesses under your existing partnership agreement.

Corporations

You will be required to obtain a new EIN if the following statements are true:

  • A corporation receives a new charter from the Secretary of State.
  • You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.
  • You change to a partnership or a sole proprietorship.
  • A new corporation is created after a statutory merger.

You will not be required to obtain a new EIN if the following statements are true:

  • You are a division of a corporation.
  • The surviving corporation uses the existing EIN after a corporate merger.
  • A corporation declares bankruptcy.
  • The corporate name or location changes.
  • A corporation chooses to be taxed as an S corporation.
  • Reorganization of a corporation changes only the identity or place.

Friendly Tips

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  • Check with the IRS for more information about applying for an EIN. Tax laws change constantly, so make sure that you have the current information by visiting IRS.gov
  • It's a good idea to keep a printed record of your EIN confirmation, so that you can have it handy when applying for things that require your EIN.