Whether you intend to hire employees or not, you still need to get an EIN (Employer Identification Number) to apply for business loans, accept payments, or open a business bank account. Luckily for you, the process of filing form SS-4 getting an EIN is not that difficult. Actually, there are four ways you can do it, which we will be looking into right now.
The Purpose of an EIN
An EIN is like a social security number for your business. To the IRS, it’s your business identifier for tax purposes. You’ll need to apply for an EIN if your business falls under any of the following situations:
- You have employees.
- You need to withhold taxes on wages paid to non-resident aliens.
- You are involved with non-profit organizations, employee plans, real estate conduits, trusts, etc.
- You need to file employment taxes or get tax returns for your firearm, tobacco, or alcohol sales.
- You have a Keogh plan.
- Your business is classified as an LLC, C corporation, or partnership.
What Is an EIN Used For?
Just like an SSN, an EIN is indispensable when filing paperwork for your business. You’ll need an EIN for the following procedures:
- Applying for your business licenses.
- Filing state taxes, federal tax reports, tax returns, and payments.
- Applying for a business bank account
- Accepting payments
Four Ways to Apply for an EIN
This is perhaps the fastest, most fuss-free way to apply for an EIN. Between 7 a.m. and 10 p.m. Eastern time from Monday to Friday, you can access a tool called the EIN Assistant on the IRS website to apply for an EIN number. The application must be completed in one session since you will not be able to save and come back to it at a later time. The system will also set to expire after 15 minutes of inactivity, so keep that in mind while filling out the answers. It’s best to complete the application questions beforehand before starting the online process.
Once you complete the application, you can receive your EIN instantly. You must have a US-based business and a valid tax identification number (such as SSN) to be able to use this method.
On the Phone
If you are not tech-savvy and the idea of navigating through an online application scares you, the second way to get an instant EIN is by calling the Business and Specialty Tax Line and EIN Assignment at (800) 829-4933 anytime between 7 a.m. and 10 p.m. local time, from Monday to Friday. An IRS employee will ask you questions and assign you an EIN at the end of the call. If you are a foreigner (not located in the U.S.), you’ll need to call (267) 941-1099 instead (Keep in mind that this number is not toll-free).
First, complete the SS-4 application form for an EIN and then fax it to your state’s fax number. To be able to receive your EIN in four business days, you need to include your own fax number.
This traditional way to apply for an EIN is also the slowest one. If you have no immediate need for an EIN and no problem waiting for four weeks for your new EIN to arrive in the mail, simply mail your completed SS-4 application to the local IRS office.
How to Fill Out Form SS-4
Form SS-4, Application for Employer Identification Number, is what you need to get your EIN. The form can be downloaded here. You can choose to fill it out online and save a copy, or print it out and fill it by hand. Whichever you opt for, it’s advisable to complete the form before you attempt the online application since there’s a timeout limit and you’ll have to start over again if it takes you too long to answer one question.
Here’s a step-by-step guide on how to complete Form SS-4:
Item 1: Your entity’s legal name. This is the name you registered with your state.
Item 2: Your business’ trade name. Your trade name may be the same or different from your legal name. It’s a name your customers would see. For example, your legal name may be “Dayton LLC” but your trade name may be “Dayton Advertising Agency”.
Item 3: Enter the name of the person in charge of legal matters. It can be the same as the name entered in item 7a for most of the cases. For an LLC or corporation, it’s the registered agent.
Item 4a, 4b, 5a, 5b, and 6: Enter the official address of your business.
Item 7a, 7b: Enter the name and SSN or EIN of the responsible party. Again, this is often the registered agent in the case of an LLC or corporation.
Item 8a, 8b, 8c: Applicable if your business is an LLC. If you answer yes to 8a, you’ll need to elaborate more on 8b and 8c (the number of LLC members and whether it’s organized in the US).
Item 9a: Select the type of entity for your business. In the case of an LLC, it can get a bit complicated:
- A single-member LLC is often considered as a “disregarded entity”.
- Multiple-member LLCs are often taxed as a partnership.
- Choose “corporation” if you want your LLC to be taxed as a corporation.
Item 9b: Enter the state and country where the corporation was incorporated.
Item 10: Choose your reason for applying.
Item 11: Enter the date your business was started. Talk with your accountant regarding this startup date since it may affect your tax liabilities.
Item 12: Choose your business accounting’s closing month. For a “sole proprietorship”, it’s often December 31. However, there are possibilities for other dates. It’s best to speak with your accountant first since your choice may have tax implications.
Item 13: Enter the highest number of employees you expect to hire for the first year. Put that number in the “Other” column. The remaining two columns are for people running a farm or hiring household help.
Item 14: If you expect your employment tax liability to be less than $1000 in one fiscal year, and you don’t want the burden to file the Employer’s Federal Tax Return quarterly, check this box. If you are not sure about your employment tax liability estimate, talk with an accountant.
Item 15: Enter the date of your first payroll.
Item 16: Enter your primary business activity. See the form instructions for more explanation regarding each category.
Item 17: Here you can provide more information regarding the product/service you offer.
Item 18: Indicate whether you have applied for an EIN in the past.
Finally, sign the form and you are ready to submit.
Still Have Questions?
If you have questions about how to apply for an EIN or want more explanations regarding the tax implications associated with different options on Form SS-4, don’t hesitate to contact us!