What is an EIN Number: Everything You Need to Know
“What is an EIN number?” is a common question to ask by someone who wants to start a corporation. 7 min read
What Is an EIN number?
“What is an EIN number?” is a common question to ask by someone who wants to start a corporation. The Internal Revenue Service identifies companies by an Employer Identification number (EIN) or Federal Tax Identification Number (FEIN). Businesses use the EIN to report income tax related activities, as an individual would use a Social Security Number. If a business has employees, or was structured to employ, it must have an EIN registered with the IRS. All businesses operating as corporations or partnerships must have an EIN. This includes small business S-corporations. An EIN is also required if income tax is withheld from compensation paid to a nonresident alien that is not classified as wages.
Businesses require an EIN for several reasons in addition to tax reporting such as:
- Those having a Keogh Plan must have an EIN.
- Involvement with certain organizations listed by the IRS must also file for an EIN to report taxes.
- EIN are usually required to open a business checking account.
- To obtain a credit card in the “Doing Business As” DBA fictitious business name of the company.
IRS Form 1099 reporting of Independent contractor payments requires an EIN of the payer.
EIN are interminable and may not be reassigned even if never used to file a federal tax return. The IRS will close an EIN account on request of the number registrant. The entity may reinstate the same account by submitting written request to the IRS.
Business entities file tax return documentation with an EIN. The EIN provides record of employer contribution to employee salaries. An EIN is also use more generally as proof of DBA. Filing for EIN at the outset of company formation is recommended to ensure that a business is understood to be legitimate in creation of agreements with third parties. Registration of an EIN illustrates that an entity is formalized, and in “good faith,” protecting the compensatory interests of employees, and abiding by the statutory rules of the federal IRS and state jurisdiction where the business is maintained.
How do I file for an Employer Identification Number (EIN)?
Filing for an EIN is one of the first steps to forming a company, partnership or nonprofit organization. Businesses can e-File to obtain an EIN. The conditions to filing for an EIN:
- An owner or entity is earning more than $6,300 annually.
- Gross income must exceed the larger of a) $1,050, or b) earned income of $5,950, plus $350 annually.
- Net earnings of at least $400 must be on record from self-employment or business proceedings.
Employer Identification Number – EIN
The EIN is the unique number assigned to a business entity by the IRS. The EIN allows for an employer to report taxes. On record with an entity’s registered “Tax Identification Number” TIN, the EIN is used for tax purposes for record of identification, reporting.and tax payment.
Partnerships, corporations, estates, and trusts, as well as some sole proprietors, must file for both a TIN and EIN when filing tax returns and other tax-related documents with the IRS. EIN registration can be submitted online for free. Resident and nonresident aliens who are unable to obtain Social Security numbers, may file IRS form W-7 to obtain a nine-digit “Individual Taxpayer Identification Number” ITIN.
The IRS requires paid tax preparers of EIN holding businesses, to include a “Preparer Individual Taxpayer Identification Number” PTIN on tax returns or claims for refunds prepared substantially or in full on behalf of a client(s). Tax preparers may apply for PTIN online or by mail. Special rules apply to foreign tax preparers who are ineligible for Social Security Number registration. Applying for an EIN allows for foreign tax preparers and the foreign entities they serve to register with the IRS for purposes of tax filing.
How to Look Up an EIN Number
Record of ownership of an entity can be located by finding its EIN. Organizations with registered EIN's IRS tax return filings and other financial paperwork, are also usually involved in filing with other governmental agencies requiring annual reports and a financial statement to qualify for regulatory compliance. EIN assignment indicates a business entity is both a legal employer and tax reporting organization. Among those organizations registering for an EIN are corporations, nonprofits, partnerships, sole proprietorships governmental bodies, and churches. Information about ownership and investment reported annually, affirm that the EIN assigned corresponds to the TIN on a tax return reporting.
Publicly traded companies with Securities and Exchange Commission publish reporting that includes the entity EIN. The publication of an annual report, including entity EIN, is mandatory for all publicly traded companies, with disclosure of reporting available to the public on the Investor Relations page of an entity’s website. The EIN is listed on the first page of SEC filing, and annual reporting to shareholders. Reference the SEC forms and filing database, EDGAR for free access to information on all publicly traded companies listed as tickers on the stock exchange.
Commercial EIN databases are an option for search of an entity’s number. Databases vary in fee for service, and typically offer a complete profile of company information. EIN searches can also be conducted via pay-on-demand services with databases like KnowX or EINFinderare. The cost of an EIN search is exclusively for actual searches performed rather a subscription fee for service.
Private companies owned by founders or private investors, also file for an EIN with the federal IRS. The most efficient method of searching for the EIN of a private company is to pay a fee-based service like Westlaw legal research service; or LexisNexis, which provides access to legal and business documents from a variety of sources online.
Nonprofits tax-exempt charities, and are not owned like other businesses, and are represented by a board of directors. Still, nonprofits publish an annual financial statement to exhibit how income went to deductible expenses such as an endowment or programs, rather than distributed to board members or other individuals.
Charitable organizations file an IRS Form 990, also published on GuideStar. Part V-A lists information about tax return filing of charitable organizations, for purposes of record. Register to perform a free nonprofit EIN search at GuideStar. Publication of Forms 990-PF for private foundations lists top officers and directors in Part VIII. The Foundation Center's 990 Finder also offers free access to an archive of nonprofit reporting information, including EIN records.
The most obvious place to search for EIN is the website of the company associated with the number. If not publicly listed or a nonprofit, some organizations choose not to publish financial record. If an EIN has been difficult to locate, EIN can be accessed by request with the IRS. Inquiries about EIN should be accompanied by the computer-generated notice issued by the IRS at time of application for fast-track results. Retention of the notice allows EIN holders access to the number. According to the IRS, the notice is the official confirmation of EIN application and serves as record of receipt.
Some banks enable customers to apply for an EIN when opening a business checking account. If already an EIN holder, opening a business checking account with a DBA fictitious business name is possible. If opening an account online, identification and notice of EIN approval confirmation may be required to complete the checking account authorization process. Many banks also print the EIN of a company on the monthly account statement.
Contact the IRS's Business and Specialty Tax Line toll-free at (800) 829-4933 to request an EIN search. There is a security procedure performed by the IRS prior to releasing the number. Inquirers are asked to provide identifying information before giving the number over the phone. Once authorized, the IRS agent can release the EIN.
Internally, an EIN can be located on payroll information. An accountant, controller, bookkeeper, or payroll specialist will generally be able to locate it for you. Most companies list EIN on all payroll records, and employee paycheck records. Tax return forms from prior years will have EIN record on them. If an Owner of a “limited liability company” LLC with employees, the EIN can be found at the top of Form 1040 or Form 990, if the business is a nonprofit organization.
If tax filing records are unavailable, contact the IRS for copies of tax returns from previous years. The IRS can verify EIN, but outside providers can provide more elaborate search capabilities and information disclosure associated with the entity registered. In cases where a search is conducted to determine if an entity is tax-exempt or a for-profit organization, visit the “Search for Charities” page of IRS.gov. The “Search Now” feature requires filling out a form with information about the targeted entity.
Employers unable to locate the EIN to their entity should call the IRS and indicate that the number has been lost. If evidenced to be the authorized EIN contact, the number will be given over the phone. Other options for business owners searching for the EIN to their entity, are to make a request with a tax adviser or internet search company providing tax number search services. In both cases, search services are usually fee-based. Alternately, an EIN can be provided to the service for confirmation and details about an employer.
Partnerships require an EIN by default. When considering doing business with a company or hiring a subcontractor to perform in the capacity of an employee, an EIN is essential to reporting record. Failure to list EIN could result in lost time, money, or business reputation.
Choose a private EIN search database, such as FEIN Search or EIN Finder. These services are subscription-based, and the fee for using them varies, although many offer a free complete search, and a charge for any additional searches.
Official state government websites dedicated to business formation, registration, and tax reporting, are potentially excellent sources for locating EIN information for companies maintained in those jurisdictions. Although not all states offer online databases searchable for EINs, quite a few like Oregon and Texas publicly disclose EIN as part of business record.
What is an EIN?
A Federal Tax ID number, the nine-digit Employer Identification Number (EIN) is recommended to all new business owners for establishing IRS tax filing status, and for verification of DBA intent to do business by opening a business checking account or credit card, and applying for state or local business licenses, and permits.
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