What to Know When Getting an EIN Number
Recent developments in the world of finance have put an emphasis on the importance of having an EIN number3 min read
Recent developments in the world of finance have put an emphasis on the importance of having an EIN number. The Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue Service (IRS) that helps to identify a business entity for tax-reporting and reporting purposes. In the United States, businesses are required to register for an EIN in order to open a business bank account, pay applicable taxes, and apply for business licenses. Businesses may also be required to provide their EIN when establishing a business credit profile.
If you are a Los Angeles-based business looking for counsel on how to register an EIN, UpCounsel can provide you with access to experienced lawyers who understand local regulations. With UpCounsel’s network of qualified attorneys, you can obtain a one-time consultation or a comprehensive freelance legal department to help you with all of your EIN-related inquiries.
In this article, we will be exploring Frequently Asked Questions (FAQs) regarding EIN numbers. We’ll be looking at why they are necessary, who needs one, the process for registering, and what costs are associated with obtaining an EIN. By the end of this article, you’ll be well-equipped with all the knowledge you need to begin the process of registering for an Employer Identification Number.
Why is an EIN Necessary?
An EIN is necessary for a number of reasons. Primarily, the EIN is used to identify a particular business entity in the eyes of the Internal Revenue Service. This means that the IRS can easily differentiate between the income and expenses of your business vs. those of your personal life. Additionally, an EIN is important for paying payroll taxes, filing your business taxes, and making and receiving payments from suppliers and contractors.
Who Needs an EIN?
The most common companies requiring an EIN are those with employees, but there are other businesses that should also have an EIN, and it is worth looking into if you are unsure. Generally, all entities that need to file a corporate tax return must first obtain an EIN. This includes partnerships, LLCs and corporations, trusts, and non-profit organizations. Additionally, estate planning entities, such as inheritances and other trusts, need EINs, as do foreign companies operating within the United States. Though the requirements may differ from state to state, it is generally recommended that any business looking for a bank account, cancelling taxes, or opening another business entity should obtain an EIN.
How Do I Register for an EIN?
There are three main methods available for obtaining an EIN. The first is to use the online EIN application found on the IRS website or the paper Form SS-4 provided by the IRS. Both options require detailed information about the business and may take up to four days to process. The second option is to contact the IRS directly by phone. When calling, an official will ask questions related to the information provided in the Form SS-4, and the EIN is usually provided over the phone. The last option is to receive assistance with the EIN application from UpCounsel. As part of their service, qualified attorneys will ensure that the information provided is accurate and that the EIN registration process is timely and efficient.
What Costs Are Associated with Obtaining an EIN?
Generally, there are no costs associated with obtaining an EIN, regardless of the method used to register. However, some services, such as UpCounsel, may charge a fee for assistance with the application. It is important to compare fees and services before making a decision on which method you will use to obtain your EIN.
Whether you are a small business owner or a large corporation, obtaining an EIN is an important part of establishing your business in the United States. Knowing why you need one, who should get one, how to get one, and the costs associated with obtaining an EIN are crucial for anyone looking to register a business entity. Thankfully, the process for obtaining an EIN has been made easier by the Internal Revenue Service and specialized services like UpCounsel.