An EIN, also known as an employer identification number, is a 9-digit number used to file tax returns. If you incorporate your business, or form a partnership, you must obtain an EIN. In contrast, if you operate as a sole proprietor you can use your social security number (SSN) instead of an EIN. However, even if an EIN is not required applying for an EIN might be a smart idea if you want to prevent your social security number from being shown on business documents.
Here are some other common instances where you will need to have an EIN:
- Paying salaries
- Need to open a business bank account
- Have a tax return filing requirement as 25% foreign-owned U.S. Corporation
- Purchasing a new business
What Does an EIN Cost?
There is no cost to obtain an EIN if you complete the application on your own. However, a tax preparer will typically charge a nominal fee to prepare and submit the documents for you. A licensed tax professional, such as an Enrolled Agent or CPA, can act as a third party designee and not only prepare the EIN application but also follow up on your behalf if it is rejected by the IRS.
If you have a SSN or individual taxpayer identification number (ITIN) the IRS will allow you to apply for your EIN online, by fax or by mail. The IRS will issue an EIN to green card holders and even to foreign persons.
How Long Does it Take to Get an EIN?
The fastest way to get an EIN is to apply online. This option is not available though for applicants whose legal residence, or principal place of business, is outside of the U.S. (or U.S. possessions). If you mail in your EIN request form it will take about 4 weeks to receive a response. Given the backlog of processing times at the IRS it is likely it may take even longer than that. If you are outside of the United States seeking an EIN for a U.S. LLC you may still apply for your EIN but must do so by calling the IRS directly.
INTERESTING FACT: If you forget, or lose, your EIN number the IRS will reveal that information, by phone, to the “responsible party” listed on the EIN application.