1) If you don’t already have an EIN for your business, you may be required to obtain one. An EIN is a nine-digit number that the IRS assigns in the following format XX-XXXXXXX. The IRS uses this number to identify tax payers who are required to file various tax returns. You will use your EIN on all of the items that you send to the IRS and the Social Security Administration (SSA). This permanent number is also needed for most business needs including opening a bank account, applying for business licenses and filing a tax return by mail. Note: An EIN is for use in connection with your business activities only. Do not use your EIN in place of your social security number (SSN).
You should have only one EIN for the same business entity. If you have more than one and you are unsure as to which one to use, call the Business and Specialty Tax Line at 1-800-829-4933 (TTY/TDD users can call 1-800-829-4059). You will need to provide the numbers that you have, the name and address to which each was assigned and the address of your main place of business..
EIN’s are used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals and other business entities.
2) If you answer “yes” to any of the following questions, you are required to have an EIN:
- Do you have employees?
- Do you operate your business as either a corporation or partnership?
- Do you file any of these tax returns: employment, excise, or alcohol, tobacco and firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following types of organizations?
a. Trusts (except certain grantor – owned revocable trusts, IRAs, Exempt Organization Business Income Tax returns)
b. Estates
c. Real Estate mortgage investment conduits
d. Non-profit organizations
e. Farmers’ cooperatives
f. Employee plans
Go to the IRS’s website for more specific information regarding if your business must obtain an EIN. Then, read Part 2 of our blog post next week which will offer more EIN tips, information on how to apply for an EIN and how to avoid common EIN problems
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