Employer Identification Number (“EIN”)

Every corporation, partnership or other business with employees must apply for, and obtain, an Employer Identification Number (“EIN”) from the IRS. An EIN serves as the Federal Tax Identification Number for the business, and it must be used by the business when opening any accounts, and in connection with paying any federal taxes on behalf of the business. Sole proprietors and single owner LLCs without employees technically are not required to apply for, and obtain, an EIN. However, it’s common for most banks to request an EIN anyway, so it’s usually a good idea to apply for an EIN in these instances as well.

How Does a Company or Business Owner Get an EIN?

Obtaining an EIN is relatively straightforward. The application can be taken care of by either completing and faxing Form SS4 to the IRS, or by applying for an EIN online through the IRS web site. The online application can be completed in 5-10 minutes. It’s also possible to mail in the Form SS4, but I can’t imagine why anyone would want to do that when it’s so easy to apply online or fax the application in.

How Long Does it Take to Receive the EIN?

If the application is completed online, whether by the business owner himself or herself, or by a Third Party Designee — for example, many business owners hire an attorney to obtain the EIN on behalf of their new company — then the EIN will be provided immediately to the filer. If the business owner makes the filing online, he or she also will immediately receive an electronic copy of the EIN confirmation letter. However, if a Third Party Designee completes the filing online, then it typically takes about 1-2 weeks for a hard copy of the EIN confirmation letter to be sent directly to the business owner. Therefore, if the business owner needs a copy of the EIN confirmation letter immediately, he or she should consider applying for the EIN online on his or her own, as opposed to getting a Third Party Designee to do so.

If the application is completed by fax, then the IRS will send the EIN confirmation to the filer by fax within four business days.

Common Problems with Filing for an EIN

In having helped dozens of new companies file for an EIN, we’ve come across some common issues that business owners filing for an EIN should be aware of. Here are a couple of them:

– If you are already using an assumed business name (aka “DBA” or “doing business as” name), have an EIN for that assumed business name, and later set up a corporation or LLC with a similar name and apply for an EIN on behalf of that corporation or LLC, it’s likely the IRS will refuse to accept your EIN filing. For example, a sole proprietor using the assumed business name “ACME” that already has an EIN decides to form “ACME LLC” and apply for an EIN. Most likely the IRS will refuse the filing. If this happens, the sole proprietor will need to call the IRS and explain the situation — you’ll likely be on hold for at least half an hour — and then wait at least 4 business days for the EIN confirmation filing to be sent by fax.

– The IRS online filing system to obtain an EIN is only available from 7 am – 10pm Eastern Time, so don’t put off the filing until the weekend, if you’re considering doing so.