An Employment Identification Number (EIN) is a nine-digit identification number that uniquely identifies your company. While it looks and functions similarly to a Social Security number, it is strictly reserved for use in commercial and business transactions.
Who needs it?
Even while having an EIN isn’t required for every business, having one may be highly beneficial. In the IRS, this tax ID is used to track the tax obligations of various legal entities, such as Limited Liability Company, Non-Profit Organization (NPO), Corporation (PSC), Church-Controlled Organization (CCO), Partnership Companies (PC), Estate of Deceased Person (EDP), and Trust and Individual Business/Sole Proprietor (IBP).
How to apply for it?
To make things as simple as possible, you may use the IRS EIN Assistant to apply for your EIN online. You’ll receive an EIN as soon as your application has been processed and confirmed. This service is provided free of charge.
Alternatively, you may fax or send your application. It is not possible to apply for an EIN if your company is formed outside of the United States. However, you can contact 267-941-1099, from 6:00 am to 11:00 pm (ET) Monday through Friday, to get an EIN number.
How much is it?
For those asking how much is the cost of an EIN, the IRS doesn’t charge an EIN Application Fee if you have a Social Security Number (SSN) or Individual Tax Identification Number (ITIN).
If you do not have an SSN or ITIN, an EIN is harder to get. This is because an EIN application on paper will be required to be correctly completed. Additionally, it must be submitted to the IRS in order to get an EIN.
What is the importance of it for your business?
To create a business bank account, to apply for business permits, and to submit your tax returns, you’ll need an Employer Identification Number (EIN). It’ll reduce any delays in getting the necessary permits and finances as you’re starting your own company. This would be very beneficial for a smooth sailing process for business compliance.
An EIN can also be a key to establish the name of your company to the vendors, suppliers, partners, and creditors. It’ll help build trust in them, something that you need to thrive in whatever industry you’re in. It’ll show that your business is credible and liable for any responsibility. You’ll be able to have a business credit history that will be used as the basis in establishing a name. Business loan applications can also be sped up if you have an EIN.
Also, to your surprise, acquiring a Federal Employer Identification Number (EIN) might also be a useful tool in the fight against identity theft. With an EIN, you can keep your personal and business funds separate. As soon as you obtain it, you may stop giving out your personal Social Security Number to customers and vendors. This also lowers the chances of a thief stealing it and getting access to your hard-earned profits.