EIN stands for Employer Identification Number; it is also called Federal Tax Identification Number. Like the individual tax payers are given a Social Security number, similarly companies are identified through EIN. Many entrepreneurs are confused if they really need an EIN, here are some basic details about it.
Who actually needs an EIN?
According to the IRs, any business who fulfills any or all of the below mentioned criteria must have EIN:
- The business has hired employees
- The business operates as a corporation or a partnership
- The business withhold taxes on income other than wages paid to a nonresident alien
- The business is involved with certain organizations listed on the IRS website
EIN is not only required to file taxes, it is also needed for many other purposes such as:
- If the business wants to open a bank account, EIN is a must
- If you need a credit card in the name of your business
- You can only get business permits if you have EIN
- Furnish independent contractors a Form 1099
- EIN provides a business with privacy
How to Get An EIN Number?
It is advised that you take the EIN number directly from the IRS website. IRS provides you with an EIN number for free. There are some online sites that fool the new business owners and charge them fee for registering for an EIN number. You can apply for EIN number by simply visiting the IRS page and follow the instructions mentioned there.
Inform about the details of the owner?
While applying for an EIN, the IRS requires that you disclose the name and taxpayer ID of the person who’s responsible for the business. This should be the company’s principal officer or any person with proper identity.
Professionals at Tax Help MD can provide EIN help in understanding the registration process.
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