Your Step-by-Step Guide to Applying for an EIN

Every business operating in the United States needs to be properly identified for tax purposes, and this is where an Employer Identification Number (EIN) comes into play.

An EIN, also known as a Federal Employer Identification Number (FEIN), is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS) to business entities. This number is not only required for tax filing and reporting but also provides businesses access to a range of benefits and essential day-to-day operational functions.

From opening business bank accounts and applying for loans to hiring employees and complying with various tax requirements, an EIN is a fundamental component for any business.

In this article, we will explore the importance of an EIN, the process of applying for and obtaining one, and the key steps to take after receiving your EIN to ensure your business runs smoothly and efficiently.

What is an EIN?

For the Internal Revenue Service (IRS) to properly keep track of business entities for U.S. tax purposes, it assigns a unique nine-digit identification number known as an Employer Identification Number (EIN), or Federal Employer Identification Number (FEIN).

This unique identifier number is not just what identifies your business as a unique tax entity; it also enables you to engage in critical day-to-day business activities and take advantage of the numerous benefits that an EIN provides.

Why You Need an EIN

We already mentioned that having an EIN is critical for identifying your business to the IRS for tax filing and reporting purposes, but your EIN also provides a variety of other benefits ranging from opening business bank accounts and applying for business financing and loans to hiring and paying employees, operating a corporation, partnership, or LLC, filing certain tax returns, and more.

Almost every business in the United States requires an EIN. To learn more about the different types of business structure types and why they require an EIN, refer to our articles The Ultimate Guide to EINs, Does an LLC Need an EIN, and Does a DBA Need an EIN.

How to Apply for an EIN

Applying for your EIN is a simple, straightforward process and can be completed in several ways. For all businesses whose principal business, office, or legal residence, is physically based and present in the United States or U.S. Territories, you can apply for an EIN online, by fax or mail. In the case of international businesses not located within the U.S., an EIN application can be completed by telephone.

Applying Online

We always recommend applying for an EIN online via the IRS website because it is the most expeditious method, often resulting in instant approval and EIN assignment during the online session.

Applying by Fax or Mail

The first step to applying for an EIN by fax or mail is sending in your completed Form SS-4.

Assuming that the information on your completed Form-SS-4 is correct, once you’ve sent the completed Form-SS4 it can take about 21-45 days to receive your EIN if you apply by fax, or up to four weeks if by mail.

You will receive your EIN number using the same method you used to apply. So, make sure that you include your fax number on your application, or that your mailing address is correct, to ensure there are no delays in receiving your EIN.

Find out where to fax or mail your Form SS-4.

Applying by Telephone

International Applicants outside of the U.S. and without an ITIN must apply for an EIN by phone.

The person making the call must be authorized to receive the EIN and be able to answer questions pertaining to the Form SS-4.

Authorize your representative by completing the Third Party Designee and signing the signature areas on the Form-SS4. This authorization is temporary and will be terminated once the EIN is assigned and provided to the designee.

To apply for an EIN by phone, call: 267-941-1099 (not a toll-free number) from 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday.

Are you an international applicant with an ITIN and a physical presence in the U.S.?

In that case, you are eligible to apply online, a simpler and much quicker process, with instant EIN approval.

EIN Application Form

The IRS Form SS-4 is the EIN application form you’ll need to complete in order to apply for, and obtain, an EIN.

Form SS-4 has three main sections, for which you should gather your information in advance. These sections include general information, business type, and other business information.

It’s best to be prepared with all of the information needed to complete these sections before you start your application because you cannot pause or save an application once it has been started. Instead, you’ll have to restart the application from the beginning.

How to Fill Out an EIN Application

Before filling out the Form SS-4, you must be able to provide the following information.

Section One: General Information:

• The date the business was started or acquired and the closing month of the accounting year
• The number of employees and the date wages were first paid
• Whether you will file IRS Form 994, for small businesses that expect to pay less than $1,000 in employment taxes
• The primary activities of the business
• The reason for the EIN application (such as starting a new business, hiring employees, opening a bank account)
• The maximum number of employees expected in the next twelve months
• The first date wages were paid to any employee
• Any supporting documents, such as articles of incorporation, partnership agreements, or other relevant legal documents

Section Two: Business Type

• The type of business entity requesting the EIN
• The number of members (only if the business is an LLC)
• The state or country where incorporation took place (only if the business is a corporation)

Section Three: Other Business Information

• Legal name of the business
• Legal name of the person applying
• Trade name, if applicable
• Mailing address, street address, country, and state where the business is located
• Name and Social Security Number or EIN of the responsible party

Make sure you have all of this information ready before starting your application process, because once you have started your application, you cannot save and return to it later. You will have to start again.

Common Mistakes to Avoid

Applying for an EIN can be a fast and smooth process if you’ve filled out your information correctly. However, there are instances in which your application could be rejected or in which you receive an IRS error reference number.

Some common mistakes to avoid:

1. Providing Incomplete or Inaccurate Information
   Incomplete or inaccurate information creates delays in getting your EIN, so it’s important to ensure that the information you submit is full and accurate. Pay particular attention to Section One: General Information, which many applicants tend to get wrong or miss.
2. Submitting Multiple Applications
   Every business entity requires a single and individual EIN, even if the responsible party or applicant is the same. If you have multiple businesses, you must treat them as completely separate entities. Submitting multiple applications for the same business can result in system errors, delays, and application rejection.
3. Incorrect Selection of Business Structure Type
   You must know your business's legal structure, as each business entity is taxed differently. When filing your Form SS-4, ensure you know your business's structure type.
   For more information on the elements that many applicants fill in incorrectly, refer to our article How to Get an EIN Number.

What to Do After Applying

Once you have your EIN number, there are a few next steps to take to ensure you use it effectively.

• Update your business records to include your EIN wherever necessary
• Keep your EIN certificate in a safe and secure place
• Make a copy of your EIN certificate to keep in a second safe and secure location
• Ensure you update your accountant and IRS information for future tax filing purposes
• Apply for appropriate business bank accounts and loans, as needed

Wrapping Up

An Employer Identification Number (EIN) is a critical, unique identifier assigned by the IRS to businesses for tax purposes. It facilitates tax filing and reporting and allows businesses to engage in essential activities such as opening bank accounts, applying for loans, and hiring employees.

The vast majority of businesses in the U.S. require an EIN. Applying for and obtaining one is a straightforward process that can be completed online, by fax, mail, or phone. It's essential to provide accurate and complete information during the application to avoid delays or rejection. Once obtained, businesses should keep their EIN secure, update their tax and business records, and inform relevant parties to ensure smooth operations.

The best time to apply for and obtain an EIN for your business is as early as possible so you can start building your business’ credibility and legitimacy today. Need more information or personalized assistance in setting up your business? LLC Attorney is here to help.