As a budding entrepreneur just beginning your journey into the business world, you have discovered several new terms that can be overwhelming. Among these terms are several acronyms related to your federal tax identification number that can be very confusing, but extremely important to understand.
Allow us to decode the acronyms so you can focus on running a successful business.
Your Business’s Identity
In the United States, establishing a business typically requires you to apply for an EIN, or an employer identification number. This unique nine-digit number is your business’s federal tax ID number and will be essential for your business paperwork moving forward, so it is important to understand what it is used for.
Continue reading this article if you want to know how to apply for an EIN, look up the EIN for an existing business, or simply want a better understanding of your company’s EIN. We explain what you need to know for your company, including where and how to look up your EIN.
What is an EIN?
An EIN, or Employer Identification Number, is a unique ID number that the Internal Revenue Service (IRS) assigns to business entities such as partnerships, corporations, estates, and other entities for documenting and tax reporting purposes. Businesses are identified by their EIN in order to ensure their business’s legal and financial documents can be kept track of. It is also referred to as the business’s tax id number or the federal tax identification number (TIN).
The federal employer identification number is unique to each business entity and is required to apply for a business license or for business accounts with a financial institution. Knowing your business EIN is frequently required and vital to ensure your business runs smoothly.
Why do I need an EIN?
Obtaining an employer identification number (EIN) is one of the first steps involved in launching a new enterprise. The employer identification number is used to identify your company to the Internal Revenue Service (IRS), just like a social security number (SSN) is used by individual taxpayers for their personal tax returns. A company’s EIN is often referred to as a business tax id number or federal tax ID number and is required when submitting federal business tax returns, opening a business bank account, hiring personnel, and registering for required permits and business licenses.
Using your employer identification number (EIN) you can apply for a business license, open a business bank account, apply for a business credit card, track your business credit report, and many other accounting department tasks.
What Is With The Acronyms?
When discussing TIN, EIN, or SSN, people often use acronyms since they are frequently encountered in legal, financial, and administrative contexts where precision and clarity are pertinent. Using acronyms makes communication easier and ensures everyone is on the same page without repeating names excessively.
It is important to understand the difference between the various tax identification numbers and how they relate to business and personal finances. The IRS requires that the correct tax identification number be used when you pay taxes or other financial activities.
Taxpayer Identification Number (TIN):
A Taxpayer Identification Number (TIN) is a tax id number that the IRS requires people and businesses to use when they file taxes. Taxpayer identification number examples include Social Security Numbers(SSNs), Individual Taxpayer Identification Numbers (ITINs), and Employer Identification Numbers (EINs).
Your business tax id number and your personal tax id number are not interchangeable. So it is important to use the correct tax id number when you file your income taxes or business tax returns.
Employer Identification Number (EIN):
An Employer Identification Number (EIN) is a number that the IRS assigns to business entities for their business taxes and keeps track of them. The US Small Business Administration recommends that you apply for an EIN online at the IRS website shortly after establishing your business account.
Social Security Number (SSN):
A personal social security number (SSN) is a unique nine-digit number that is given to U.S. citizens, permanent residents, and some temporary immigrants by the Social Security Administration (SSA).
Individual Taxpayer Identification Number (ITIN):
An ITIN is an id number that is given to nonresident and resident aliens, their spouses, and dependents who cannot get an SSN but must file tax returns.
When do I need an EIN?
Your eligibility for a new EIN from the Internal Revenue Service (IRS) after you establish your business entity as a limited liability company (LLC), a corporation (C Corp), or another ownership structure. Other business ownership structures such as a sole proprietorship do not require an EIN. However, a sole proprietor may still require one for specific business aspects, such as working with nonprofit organizations or farmers’ cooperatives.
You should determine whether or not you require an EIN before you launch your company. You will need to apply for an EIN if you own a company that falls under any of the following categories:
How to Locate Your EIN?
Locating an employer identification number is very straightforward. If you already have an employer identification number (EIN) from the internal revenue service (IRS), you can find it in a few different ways:
Your EIN Confirmation Letter
When you first requested your new EIN, the IRS issued a confirmation letter containing your new EIN. This confirmation letter should be filed securely with your other business documentation.
Business Bank Account Statements
Your EIN may show up on your business bank account or merchant processing statements. Go to your online banking site or look at your most recent paper statement to find your EIN.
Previously Filed Tax Returns
Another obvious place to search is your previously filed tax returns.
Call the Internal Revenue Service.
If you are still struggling to find your EIN, call 1-800-829-4933 and ask for a 147C letter from the IRS. Before giving you your EIN, the person will ask some security questions to confirm your identity as a corporate officer of your business.
Lookup Your Company on the State Department of Corporations
Depending on the state you live in, you may have registered your business and gotten an EIN at the same time. Check with the state agency in charge of registering businesses to see if they have your EIN on file.
For example, if you registered in the state of Florida, you can check Sunbiz.org, the official website for the Florida Department of State Division of Corporations, for your EIN.
Be sure to carefully check the results to find your business, because there may be more than one with the same name. Even though EINs are not always available to the public, you might find other helpful information about your business, such as whether or not it is registered, whether or not it has filed an annual report, and more.
Make use of an EIN Lookup Service
Although the IRS does not provide a publically accessible EIN lookup tool, you can use third-party EIN lookup services to find your EIN. Some services might cost money, while others might be free.
EIN lookup services include the following:
FEIN Search (Paid):
Melissa Data (Free):
https://lookups.melissa.com/home/
Keep in mind that these services may not have the most recent information, so you should always confirm your EIN with the IRS.
You don’t have to work hard to find your EIN. If you follow the steps in this blog post, you should be able to find your EIN quickly and without much trouble.
Make sure to keep your EIN safe and close by so you can get it quickly if you need it. As a business owner, you need to have this information at your fingertips to make sure your business runs smoothly, and you meet your tax obligations.
Keep Your EIN Secure and Easy to Find
Once you’ve found your EIN, be sure to file it somewhere safe so that it does not get lost. You can use a secure cloud storage service, a password-protected document, or simply file it away on paper. Retaining financial documents, such as your EIN confirmation letter, business account application, and annual tax return for at least three years is highly recommended.
Commonly Asked Questions
Can I substitute my Social Security Number (SSN) for an EIN?
While sole proprietorship and single-member LLCs are permitted to utilize their Social Security numbers for tax purposes, it is recommended that your small business obtain an Employer Identification Number (EIN). A sole proprietor using their Social Security number increases the risk of identity theft or other security concerns.
How can I obtain an EIN?
There are three different ways to obtain an EIN: online, by fax, or by mail. The fastest way to apply is online, and you will often receive your EIN immediately versus waiting up to two weeks.
Go to the IRS EIN Help page to start the process of applying for your new EIN online.
Is there a charge for obtaining an EIN?
Acquiring an EIN is a free process offered by the IRS.
Is it possible to change or cancel my EIN?
Once an EIN number is assigned, it cannot be transferred to a different corporate organization under any circumstances. Even if your business shuts down, the EIN remains attached and can only be used again if the same business reopens.
If you need to update something, such as your business address or name, you can contact the IRS to update the information associated with your EIN.
Conclusion
Now that you understand the importance of your EIN and how it differs from the other tax identification numbers, you can begin using it to grow your business. Your EIN will be vital in acquiring a business license, filing business loan applications, filing federal and state taxes as a business entity, and several other instances.
By following these instructions, you will be well-prepared to handle any circumstance that requires your EIN.
Best wishes in all your business endeavors!
