Just like all the citizens are required to have a social security number, all the businesses operating tin the US are required to obtain an EIN number. EIN number also known as the federal tax id number is a unique nine-digit number given by the IRS to businesses for the purpose of identifying them.
Almost all the businesses, who hire employees and are liable to pay taxes are required to obtain an IRS tax ID. All businesses like partnerships, LLCs, corporations, trusts, estate of deceased, church and other religious entities are required to obtain an EIN number. Most businesses without employees,opt to get an EIN for the purpose of identification. Sole proprietors prefer to get EIN in order to portray a professional image to the clients and also to avoid furnishing the social security number, which may result in identity theft.
The IRS tax ID is required by businesses for the purpose of opening bank accounts and obtaining line of credit from banks, applying for other license and permits required to operate the business and to establish accounts with wholesalers and vendors.
Employer Identification number is also known as the IRS tax ID as it is issued by the federal government. Apart from the EIN, businesses also need to obtain a state tax id or state identification number. Businesses that operate in multiple states and have employees there, are required to have multiple state tax id numbers.
The process of applying for EIN is simple and can be done in four different methods. You can apply for the EIN online, through email, through fax or over the telephone. Most of the businesses prefer to apply for the EIN through the online method as it is most convenient, fastest and secure way to obtain an EIN. You will receive the number as soon as the registration process is complete. The number can be used immediately to open bank accounts and to apply for other licenses and permits. However, businesses have to wait for two weeks to file any taxes using the EIN.
If you have lost your IRS tax ID number there are a few ways to locate it. You can approach the bank, with whom you have checking account and ask them to retrieve the EIN number or you can also find it from the previous tax returns. Some consultants also help you to retrieve the EIN number in a fast and secure way.