If you are a small business owner, chances are you either have or need a federal tax ID number, also called an EIN (Employer Identification Number). This is a unique identifier you’ll need to correctly file your annual business taxes, pay quarterly taxes, and take other necessary steps of running your business.
The process of figuring out how to start a business varies from state to state, but as you file the paperwork to get set up, you’ll likely request your EIN from the Federal government. If you’ve been in business a while, you probably did this when you first started. If your business is new, you may have already filed for an EIN or perhaps this is something you need to do.
This article will help you either find your tax ID number or apply for it so you’re squared away for filing your Q4 taxes, annual business taxes, and other financial or legal transactions for the coming year.
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When you’ll need your EIN number
The IRS requires that certain businesses have an EIN. If you can answer “yes” to any of the following questions, your business falls into this category:
- Do you have employees?
- Do you operate your business as a corporation or a partnership?
- Do you file any of these tax returns: employment, excise, or alcohol, tobacco, and firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan (a tax-deferred pension plan for people who are self-employed)?
- Are you involved with any of the following types of organizations?
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Nonprofit organizations
- Farmers' cooperatives
- Plan administrators
Even if your business doesn’t fall within these parameters, which may be the case if you have a single-person LLC or a sole proprietorship, it is still a good idea to have an EIN.
First, it doesn’t cost you anything to apply for an EIN. Second, once you have one, you can do many things officially as a business instead of a single person. Some of these things include applying for a business credit card with your EIN, opening a business bank account, hiring independent contractors and issuing 1099 forms to them to account for the money you paid them for services, as well as apply for various permits and licenses.
Third, you create a clear differentiation between yourself and your business. Sole proprietors use their personal Social Security Numbers (SSN) on tax documentation. Using an EIN for filing taxes and official documentation takes your SSN out of the equation and keeps everything directly linked to your business.
How to find your tax ID number — 3 options
EINs are not automatically assigned to a new business. You have to apply for one, which is a simple process. These three steps will help you figure out if you applied for one in the past and already have one, or if you didn’t, how to get one.
- Look it up on a previous tax return
Go through your past tax returns and look for a field that says Employer ID number (EIN) at the top of the first page of your business return. For example, on a Schedule C that reports profit and loss from a business, the EIN would be in the D field. If your previous returns only show your Social Security Number, you may not have requested an EIN and would need to look further or file a new request.
- Look for your EIN on other documents
When you receive your EIN from the IRS, you’ll get a confirmation letter. This will either be mailed or emailed to you. If you have a business bank account, credit card or credit report, business loan, or other legal documentation, your EIN may be in those files. If you don’t find it in this step, move onto the final option.
- Call the IRS and request your EIN
You can contact the IRS directly to request a search for your EIN:
- Business and Specialty Tax Line: 800-829-4933
- Hours: Monday through Friday, 7 a.m. to 7 p.m. local time
If all of these actions do not produce an existing EIN, you will have to apply for one. The easiest way to do this is online at IRS.gov. You can also complete a Form SS-4 and fax or mail it to the IRS. Finally, you can apply by phone by calling 267-941-1099.
In conclusion, finding your EIN is simple
Having an EIN is a handy thing for any business owner, even if you’re just one person running a small business by yourself (like me!). After all, once you're successful at how to make money, you have to deal with how to pay taxes. An EIN can open many doors for you and make the administrative side of your job a lot easier. With Q4 taxes coming up soon and returns due by April 15, making sure you’re ready to file your paperwork as soon as possible will save you some headaches in the coming months. So get to it!
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