Upmetrics AI Assistant:
Understanding the Purpose of an EIN
An Employer Identification Number (EIN) is a nine-digit number that serves as a unique identifier for businesses and other entities in the United States. It is issued by the Internal Revenue Service (IRS), and is used to track business income for tax purposes and to establish credit. It is also known as a Federal Tax Identification Number and is required for certain business activities.
An EIN is similar to a Social Security Number for an individual, as it is used to track business-related income. It also allows businesses to open a business banking account and apply for business loans. It is required for all businesses that employ staff, and is used to set up payroll tax accounts.
How to Apply for an EIN
The process of applying for an EIN is simple. The IRS offers two methods of applying: online and by mail.
- Online: To apply online, you need to have a valid Taxpayer Identification Number (TIN), such as a Social Security Number (SSN). Filling out a short online form will allow you to immediately receive your EIN. This method is fast and easy.
- By Mail: If you don’t have a TIN, you can mail a completed Form SS-4 to the IRS. It’s important that you read the instructions carefully and fill out the form correctly to avoid delays.
Situations that Require a New EIN
An EIN is generally not transferable, and most businesses need to obtain a new EIN if the circumstances of their business change. Situations that require the business to obtain a new EIN include:
- A change in the form of ownership, such as from a sole proprietorship to a limited liability company (LLC).
- A change in the address or location of the business.
- A change in the name of the business.
- A new or additional business activity.
