Checking into an Employer ID Number (EIN) with the IRS
The U.S. Internal Revenue Service (IRS) can issue an Employer's Identification Number (EIN) for your business. In some cases, getting an EIN is not optional. For example, if you're going to have employees or operate as a corporation or partnership, you must get an EIN. There are other situations that apply as well, and you can quickly check to see if you must have an EIN to do business by checking Do You Need an EIN? on the IRS web site. You can access the form to request an EIN from the same article.
Update: The IRS now allows you to complete your EIN application online at: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html. As you complete the application it can warn you of invalid information or errors, so you may be able to save considerable time in applying for your EIN online. Additionally, if your application is successful, you'll be issued your EIN on the spot so you won't need to wait to open a bank account, etc.
Should You Get an EIN if You're Not Required to Have One?
Even if you're not required to have an employer ID number (EIN) by the IRS, getting one is often a good idea. For one thing, it makes it easier to open a bank account in your business name and it will help keep your social security number private. Finally, if you want your clients to hire you as an independent contractor, it's another layer of protection for your clients so that the IRS won't classify you as an employee.
When You'll Need a New Employer ID Number
For home business already in operation, you will need a new employer ID number (EIN):
- If you are the subject of a bankruptcy.
- If you take in partners and operate as a partnership.
- If you purchase or inherit an existing business that you operate as a sole proprietorship.
- If you change your legal business form to LLC and plan to hire one or more employees within the next 12 months, you'll need a second EIN for the LLC. Here's the actual quote from the IRS:
"IRS regulations require a single member limited liability company that is (1) owned by one individual and (2) has or will have employees within the next 12 months to have two EINs. One EIN is assigned to the individual owner (as a sole proprietor) and one is assigned to the LLC. If you do not already have an EIN as a sole proprietor, you cannot use the online EIN application to apply for the LLC EIN. Please call the Business and Specialty Tax Line at (800) 829-4933 between 7:00 a.m. and 10:00 p.m. local time and an assistor will take your information and assign you the two required EINs. We are sorry for the inconvenience."
When You Won't Need a New Employer ID (EIN)
You can continue to use your original EIN if your business location changes, or if you change your business name. You can also use the same EIN for multiple businesses you operate.
More in the Business Identity Series
- 8 Steps to Your Business Identity - Introduction & Overview
- Brainstorming Your Business Name and Tagline
- Address and Phone Numbers for Your Home Business
- Opening a Business Bank Account
- Creating Your Business Logo
- Ordering Your Business Cards
- Creating and Ordering Your Business Stationery
- Establishing Your Business Website