Among the many details most business owners need to pay attention to is the employer identification number.
The number, commonly called an EIN, or a federal tax identification number, is used by the Internal Revenue Service to track the taxes owed by individual businesses. Unlike a Social Security number, which comes in the format xxx-xx-xxxx, nine-digit EINs are issued in the format xx-xxxxxxx.
Some very simple sole proprietorships can get along fine by using the owner’s Social Security number as the EIN. But if you establish a retirement plan, hire an employee, take in a partner, file for bankruptcy, incorporate or engage in any of a number of more complicated business activities, getting an EIN becomes mandatory.
Fortunately, the process of applying for a federal EIN is fairly simple. Businesses within the US or US territories can apply online at the IRS website. In most cases, a number can be issued and used within minutes.
Applications can also be taken by phone at (800) 829-4933 from 7 am to 10 pm Eastern time, Monday through Friday. As with the online process, a number can be issued almost immediately. Those with a more old-fashioned bent can still use the paper Form SS-4 available on the IRS website.
Once issued, the new EIN can be used immediately to do such things as open bank accounts, apply for business licenses or file tax returns by mail. But it can take up to two weeks before you can use it to file an electronic return or make an electronic tax payment.
Filers should also check with their home states to determine whether the state needs to issue a tax identification number of its own.
