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How to Apply for an Employee Identification Number (EIN)

Published: November 29, 2018

What is an EIN?

EIN stands for employer identification number. It is a unique, nine-digit number that the IRS assigns to businesses for tax purposes.

Who needs one?

When you form a business entity, including a corporation, limited liability company or partnership, you’re required to apply for an EIN. If you’re a sole proprietor, it’s only required under certain circumstances. The IRS has an EIN questionnaire that can help you determine whether you’ll have to obtain one.

Even if it’s not required, you may want to consider getting an EIN, especially if you’re a freelancer or contractor. “It stops you from having to hand out your Social Security number to everyone,” says Russell Garofalo, founder of accounting firm Brass Taxes. Having an EIN and DBA (doing business as) name can help boost your credibility when you’re starting out. Plus, it’s free.

How do I get an EIN?

The fastest and easiest way to apply for an EIN is to fill out an application using the EIN Assistant on the IRS website. Your information can be processed and validated online and you’ll receive your EIN immediately. There are only two requirements for filing online: Your business must be based in the United States or U.S. territories, and you need a valid taxpayer identification number.

The EIN application, Form SS-4, can also be downloaded and faxed or mailed to the IRS. To make your life a little easier, the IRS created a detailed PDF pamphlet for each business structure that includes a line-by-line guide to filling out the form. It can take about four days to process a faxed application, and four weeks for a mailed one. If you fax or mail your application, receiving the EIN online isn’t an option.

I have an EIN. Do I need a new one?

If you’re a sole proprietor with an EIN and you have plans to incorporate your business, you must apply for a new EIN when you change your business structure. However, each structure has different circumstances that affect whether you’ll need a new EIN. Check out this list of requirements from the IRS to determine whether you need to update your EIN.

© Nerdwallet, Inc. All rights reserved. View full article at nerdwallet.com.

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