Federal tax identification, more commonly known as an employer (or tax) identification number (EIN), is obtained by EIN application. It is a nine-digit tax number issued to commercial businesses in the United States. This identification number functions to facilitate tax reporting for the USA Internal Revenue Service (IRS). Just like social security numbers (SSN), they expire in rare cases. They are never reallocated to another business. In this article, we’ll go over the EIN number in detail and try to include in what situations you might need it.
Who Can Get an EIN Number?
The basic requirement for an EIN application is that the applicant has a business establishment in the USA. Meanwhile, most business operating in the USA can obtain an EIN number easily. This includes business entities such as sole proprietorships or LLCs. The EIN number is also valid for government agencies and non-profit organizations.
Why Do You Need a Federal Tax Identification Number?
You need a tax identification number for many reasons, including an obligation to pay taxes. Companies use the EIN number to track their consumption tax return. EIN is also required to track employment tax returns. Here are some important reasons why you should start an EIN application:
- Banking and Finance: In most cases, banks and lenders require any business to have a valid federal (employer) tax identification number to open a bank account.
- Staffing: If you are planning to recruit for your business in the US, you must obtain a tax number from the IRS. Because of that: The IRS tracks payroll tax transactions with your EIN number.
- For Self-employed retirement plans you need EIN: To facilitate related to self-employment retirement plans, you need a tax identification number. According this situation, you can track tax processing by EIN number.
- Situations where sole proprietorships need an EIN application: Sole proprietorships need a federal tax identification number when filing for bankruptcy. The reason that will be the people who will buy the business in case of bankruptcy. These individuals may not have the intention to run the business as a sole proprietorship in their plans.
In Which Situations You Do Not Need An EIN Number?
If you have a partnership or corporation in the USA, having a tax identification number is mandatory. However, most sole proprietorship owners don’t actually need them. Similarly, if you have a single-member LLC in the United States, you do not need any tax identification number. According to EIN application it is only needed when the LLC needs to file or file employment tax returns.
The Benefits of an EIN Number
Much sole proprietorship in the United States does not require a tax identification number. However, it would be useful to have a tax identification number. If sole proprietors acting as independent contractors have federal tax identification number, do not need to provide their Social Security Number. Thus, possible theft possibilities are reduced.
Also, having a federal tax identification number will make you appear more professional to your clients. EIN application will help you expand your customer base and solidify customer relationships.
The process of obtaining a federal tax identification number is quite simple. Firstly to obtain the EIN number, business just needs to fill and send an SS-4 form. Also you can submit your application online. So you can obtain your federal ID number more quickly and easily.
Support of Consulting Firms for the EIN Application
In the USA, you have the opportunity to apply for an EIN individually. You can also get an EIN even if you’re not located in the USA. As you now know, the EIN is issued by the IRS. So that log in to the IRS website to get an EIN number. Fill out an SS-4 form required to apply for this number on the site.
After completing this form, it should be sent to the IRS with the necessary information and documents and the transactions should be followed.
There are consulting firms that will help you get an EIN number from the IRS for your company at a very affordable price. Thanks to these companies’ easy and fast services, you can avoid confusing IRS forms and procedures. Thus, you benefit from the professional customer support of consulting firms for the EIN application.