Employer Identification Number

Employer Identification Number: The Ultimate FAQ Guide

I know you’re here to learn more about employer identification numbers.

A reason this guide will explore everything you’re looking for about employer identification numbers.

Keep reading to learn more.

What is an EIN?

EIN is an identifier of the business entity.

The IRS assigns this unique number to businesses to allow monitoring of tax payments.

The internal Revenue Service highly recommends the employers of businesses apply for the EIN if the business is within the US or its territories.

Employer identification number

 Employer identification number

What is the Purpose of an EIN?

EIN is purposely used in the identification of business entities that are obligated to pay taxes to the relevant authority.

The IRS uses this number to trace the flow of tax payments made by the business.

Allows each hired employee to be assigned an individual EIN that allows them to be taxed individually while the entity is taxed separately

It allows fast processing of business licenses and allocation of finances to the business where need be.

Does My Business Need an Employer Identification Number?

Yes, it does. You will need to obtain an employer identification number for the business because the benefits outweigh operating the business without it.

These benefits include:

  • Allows you to file the tax returns easily, therefore, avoiding constant encounters with the IRS.
  • It also allows you to obtain finances to boost the business when need be.
  • Acquisition of business licenses is made faster.
  • It also allows you to obtain all the legal business documents that allow you to operate the business.

Also, if you have employees it is recommended to obtain the Employer identity number.

This allows the IRS to be able to determine the amount of tax taxed to employees and the business at large.

Note, even if you are operating a sole proprietor business it’s also advisable to obtain EIN to be able to separate personal and business taxes.

Also looking to scale up the business you need the EIN.

How does EIN vs SSN vs ITIN compare?

Comparison of EIN vs SSN vs ITIN is mostly applicable when determining how you are running the business.

This implies;

The business is a sole proprietorship

You are operating a limited liability company, hiring employees.

Operating as non-resident doing business in the US.

Therefore, Social Security Number is used when you are operating the business as a sole proprietor to pay for the business taxes.

It also allows you to have access to social security and social services.

In cases where you want to hire employees, obtain credit loans from banks or form a Limited Liability company the EIN is used for tax reporting.

Individual Taxpayer Identification Number applies to non-resident individuals operating businesses in the US, who are also obligated to pay taxes for the business.

Note, for you to obtain the SSN and EIN you should be a US resident and have all the legal documents to prove that.

Is the EIN the same as the Federal Tax ID?

 Taxpayer ID

 Taxpayer ID

Yes, it is

Federal Tax ID serves the same purposes as the EIN.

Employer Identification Number is also referred to as Federal Tax Identification Number.

It is commonly used to fasten the process of paying taxes.

Federal Tax ID is also important if you want to hire employees because it allows the employees to be taxed individually.

Can I Apply for an EIN without a Tax ID?

Yes, application of the EIN does not require you to necessarily have the Tax ID.

There are two basic procedures you can use to apply for the EIN.

They include:

You should incorporate the business in the US using incorporate.com within 2-3 business days. This is done by;

  • Asking for the EIN directly
  • Sending mails to the US mailing address
  • Calling them using the given number

Secondly, you can obtain the tax ID from the IRS online platform or by using forms.

You can visit IRS.gov to apply online. Alternatively, look for forms and fill them out to apply.

Are Any Entity Types Excluded from Applying for an EIN?

No. They are not.

Every business entity can apply for the EIN whether the business is a small scale to large scale, whether a sole proprietorship or a partnership.

How do I Apply for EIN?

Application of the Employer Identification Number is done freely with no charges requested. You can apply for the EIN in the following ways:

  1. Online application: This allows employers to fill in all the required information that is validated via a system and an EIN is issued.

This process is strictly for employers whose businesses are located in the US and its surroundings.

  1. Apply using Fax: SS-4 Form is completed by the relevant employer and faxed to the issued fax number.

Upon-, review of the required information, the EIN is processed with a period of 4 days and faxed to the employer.

  • Apply using Mail: IRS checks out whether the entity has provided the required information.

It is then determined if the entity requires a new EIN if so, it is processed and mailed to the employer through the provided mail address.

  1. You can also call the IRS directly using the provided service number to obtain the Employer Identification Number.

You are required to provide the assistant with relevant information and upon verification of the legitimacy of the business, the EIN is issued immediately.

You can reach the IRS center via 800-829-4933 during working hours.

Can I Apply for an EIN Without a Business License?

Yes, you can apply for the EIN without having a business license.

Obtaining the Employer Identification Number first allows you to obtain other documents such as a business license.

In most countries, you must obtain the EIN during the initial stages of the business.

Obtaining EIN increases your credibility with the IRS thus prevents constant encounters due to delayed tax payments.

Also, it varies with the country and city you are operating the business in.

What are Responsible Party vs Nominee in EIN Number Application?

The owner, partner, or grantors of the business are the ones considered as the responsible party. Also, they have control or entitlement of the funds and assets of the business.

This entitlement allows the individual to directly or indirectly manage and control the business and disposition of business funds and assets.

A nominee is an individual nominated by the business to act on their behalf in running the business.

They are not entitled to controlling or managing funds, assets neither do they perform the dispositioning of the business.

Note in case the nominee acquired the EIN wrongly action should be taken to correct this mistake.

This prevents the disclosure of unauthorized information to the public.

To achieve this the business owner is required to fill all the required information in the SS-4 Form and submit it to relevant authorities

How Much does an EIN Cost?

The IRS has made the process of obtaining the Employer Identification Number free.

Besides, the employer is required to provide all the required information to the IRS, which allows easy processing of the EIN.

The internal revenue service has constantly issued a warning on companies that charge business owners for EIN whereas you can obtain it at no cost.

If you decide to obtain the EIN from online company, any charge made doesn’t go to IRS but instead to the company offering the service.

There are no charges requested while applying and obtaining the EIN for the business.

It is highly recommended to obtain the EIN directly from the IRS to avoid incurring unnecessary costs.

How Long will it Take to Get EIN?

The duration of obtaining the EIN depends on the mode of application you have used.

For instance,

The online application allows you to obtain the EIN immediately

If you prefer using fax, you are required to send a completed forms-4 to the service center and a response is given back within a week.

Application by mail takes four to five weeks if the required information on the SS-4 is provided accurately.

Also, application by phone calls, the EIN is processed immediately.

This mode is reserved by the IRS for international applicants.

What Happens if I Lose or Misplace my EIN?

You should consider the following actions in case you lose or misplace the Employer Identification Number:

  • Contact the bank in case you used the EIN to open the bank account.

They will trace the EIN for you.

  • Find the computer-generated notice given to you by the IRS when you applied for the EIN.
  • Look for previously filed tax returns of the existing business that you have lost.

These papers should have an EIN indicated on them.

  • You can call the IRS using the provide toll number to search for you the EIN directly

What Should I Do if I am Assigned an Employer Identification Number I didn’t Request?

Employer identification number

 Employer identification number

If you have been assigned an EIN that you didn’t request it’s important to determine what was the main purpose, if the process is legit to avoid thefts.

Before assuming and taking any actions you should evaluate, maybe a third party requested the EIN for you for a legit business purpose.

For instance, third parties may include spouses, community club, business partners’ executor of a trustee while requesting for EIN.

Therefore, verify if the third party indeed requested the EIN

Contact the IRS for assistance if you determine that the EIN has been improperly assigned to you.

How Do I Find my Employer Identification Number?

Often you can encounter documents that require you to fill in the EIN and probably you cannot remember.

You can use the following ways to obtain the EIN:

Check the previously file tax return documents, it should be noted in that document.

Check on the original document issued by the IRS when you first applied.

You can also check on the bank documents issued while opening the bank accounts.

You can also check on the 1099-MISC form used to report payments for the business.

How do I Conduct an Employer Identification Number Lookup for Another Company?

Businesses may sometimes need to look up the EIN of the company to verify the information of new suppliers or clients information.

The following ways can be used for the lookup:

Ask the company directly

Search for securities and Exchange Commission’s website

Get the company’s business credit reports

Purchase of credit cards for the business in case the company is not registered as a public company.

This allows you to search for the company using the document in the public

Use a paid Employer Identification Number database

Use Melissa database for non-profits

Can I Verify the EIN? How?

No, verification requires authorization that is given by the IRS.

If you are not an authorized representative you cannot get verification of the EIN number.

In cases of non-profit business no authorization is required and the employer can verify directly with IRS on the Exempt Organization page of IRS website.

You should also check the paycheck to verify that the tax return filed has the correct Employer Identification Number to avoid its rejection.

Is an EIN Record Public?

No, The Employer Identification Number records are kept private by the IRS.

The IRS requires the employer to fill the SS-4 form that contains vital information such as the amount of taxes paid and business identification information.

Such information is not released to the public due to the safety of the employer and the business too.

Does my Business need a New EIN?

Yes, if you intend to expand the business in terms of changing from a sole proprietor to forming a partnership, hiring employees to work for you a new EIN is required.

The inclusion of employees into the business requires every employee to be issued with an EIN.

As a sole proprietorship, if you buy or inherit an established business or the business has been subjected to bankruptcy, you are required to obtain a new EIN.

Other considerations include; partnership where the old one has ended and a new one is formed.

Is Employer Identification Number the same Importer Number?

Yes, the Importer number can be used to serve the same purposes as the EIN.

Employers can conduct business or import into the country using the Importer number to pay tax duties to the relevant authority.

Can I Cancel my Employer Identification Number?

No, you cannot cancel the EIN obtained from the IRS the moment it is issued for the business. Also, the EIN cannot be reassigned or issued to other business entities.

It should be noted only the IRS can close the EIN account upon submission of the request and the reason you want the EIN closed.

The IRS ensures that all the returns have been made and any outstanding charges before closing the EIN.

Do Foreign Importers need an EIN when Importing into the US?

No, foreign importers do not need an EIN to import into the US rather a Custom Assigned Importer Number is issued by the relevant authorities. CAIN allows the importers to do business without having the EIN.

What is the Difference Between EIN and CAIN (Customs Assigned Importer Number)?

EIN is assigned to businesses for identification.

Normally, EIN is issued to employers who are residents in the US and are operating the business within or in the territories of the US.

Whereas, the CAIN is a type of identification used by imports in the US.

With the acquisition of CAIN, the importers do not need to obtain the EIN to operate.

Who is an Importer of Record for a Non-US importer?

If a company is importing to the US but is not established in the US, a third party will need to act as the importer of record.

This third party could be a third-party service, or the non-US company could arrange for the US client to act as the IOR.

Why does a U.S. Business Need to Act as the Ultimate Consignee for a Foreign Importer?

The US business acts as the ultimate consignee if:

  • The business you are operating is registered and located outside the US territories.

Even with possession of EIN you are required to name the US as the ultimate consignee of the shipment.

  • You do not have a US entity but in possession of CAIN.

you can name the US business as the Ultimate consignee during the importation of the shipment in the US.

Can Amazon Act as an Importer of Record for Shipments Going to an Amazon FBA Warehouse in the Us?

No, Amazon FBA does not act as IOR due to the huge responsibilities that the IOR are assigned.

Or ensures that the shipment has been successfully been imported to the required country.

What is the Procedure for Importing into the US Without a US Presence?

Importing into the US without a US presence requires you to provide relevant documentation of the business to allow verification of the legitimacy of the business.

This process is established as a foreign importer of records.

This procedure requires:

  • Customs power of attorney signed by two officers of the company
  • Copy of the articles of incorporation
  • Copy of documents that empowers the two officers with authority to sign the power of attorney.
  • Scans or pictures of the two signatories.

Do I need an EIN to Import from Alibaba?

No, Alibaba is more concerned with the quantity of the shipment you order from them.

They are not concerned whether you have obtained the EIN for the business.

In some cases, Alibaba requests the EIN because the customs request it during shipping.

Is EIN for Import Any Different from EIN for Export?

Yes.

EIN for import is used when shipping goods from other countries to the US.

EIN for export is used when shipping goods from the US to outside countries.

Both EIN for export and import are issued by the IRS to enhance business identification and for easy follow-ups on the tax administrations.

Where Can I Get More Information about US Import Policies, Requirements, and Procedures?

Topics on the CPB trade page explain the basic importing, exporting and requirements, arrival of goods formal versus informal entry, and restricted merchandise.

If you are a frequent importer, you should read Importing into the US that contains in-depth information when seeking to venture into importing business.

You should also read Informed Compliance Publication that has prepared some Informed Compliance Publication.

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