An EIN refers to an Employer Identification Number, a unique 9-digit identifier issued by the IRS for the business entities operating in the US market. It is assigned to a business entity so that the federal department can easily identify and keep track of its activities for tax purposes.
It is also known as FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number). It is as important as an SSN for the individuals in the USA, so make sure you are not forgetting to apply for EIN.
EIN is a tax ID number, specifically for the people operating their businesses in the US market. This means any business, whether it is into manufacturing, trading, sales, import-exports or anything, needs to get an EIN.
It doesn’t matter if you are a sole proprietor, a partnership firm, an LLC or a freelancer, having an EIN provides you with a unique identity which helps you in keeping your personal away from your professional. With an EIN, all the information related to the intra and interstate transactions can be brought together in one place and streamlined thereon.
With EIN, you do not have to worry about banks, tax departments, or any financial institutions to mix up your personal and professional financial information. They stay separated.
In order to get funds or finances, many businesses require a business bank account to check your worth. Meanwhile, an EIN tax ID is required to open the business bank account.
If you are wondering that EIN can be replaced with an SSN, then you are mistaken. You must fill an EIN application and get it approved if you are planning to hire employees.
The separate personal and professional accounts allow you to preserve your limited liability by keeping separate entities, which is possible with the help of EIN.
The IRS issued EIN saves you from sharing SSN with lenders, business owners and others which reduces the chances of sharing SSN. Ultimately, saving you from identity theft.
Along with the Form SS-4, one needs to give in the basic information regarding the entity and business in order to get the EIN. All such requirements are clearly mentioned on the website making it easier for the individuals to have a hassle free application process.
Depending on the need, whether it is a sole proprietorship firm, partnership firm, corporation or LLC as well as the individual whether they are a US citizen or not, the time may differ. However, it remains somewhere between 2-4 weeks.
In case one has an SSN, the waiting period gets reduced. However, please remember that in case of an already existing EIN, one cannot use the earlier EIN for electronic filing, payments made online or to go for a matching program by the IRS.
Filling out an EIN application can be done remotely from anywhere in the world. However, it is important to have a genuine business practice going on in the USA to get the application approved. The IRS website allows the applicants to fill out the request via mail, fax or direct online service.
It depends on the type of business you are running. One EIN can be applied for one entity. So, in sole proprietorship, only one EIN can be used. As for the corporation and divisions, the EIN can be applied as per the number of entities and divisions.
You can check the status of the EIN through the IRS website. We hope you know that EIN is used when you have to make tax payments or when you have to apply for the tax returns. It is like an SSN number for the business entity, so it can also be used while making transactions, opening bank accounts, getting business licenses, hiring employees, borrowing funds, as well as to be deemed trustworthy.