There are good chances that you may have come across the federal identification number before you decided to form a business. Keep in mind that EINs are given by the Internal Revenue Service also called the IRS, but many business owners are overwhelmed by the prospect of dealing with the IRS.
After all, most people don’t feel comfortable dealing with their taxes. This page discusses what you need to understand about the Employer Identification Number.
The federal identification number (EIN)
An EIN is also called a Federal Tax ID, FEIN, and a Federal Tax Identification Number. When you decide to file a federal tax return, you need to have a social security number. Therefore, the IRS utilizes this social security number to identify you.
An EIN also works in the same way as a social security number when it comes to a business entity like corporations and limited liability companies. An EIN for a business entity is unique and can be with the business throughout its existence. Regardless of whether the business dissolves or closes down at one point in the future, an EIN will never be used again.
It’s worth noting that not every company needs to have an EIN. Single-member LLCs that are taxed as pass-through entities and sole proprietors don’t require to have an EIN. The only exception is when these businesses have employees.
Besides this, all types of businesses including corporations need to have an EIN. This also applies to businesses formed as holding companies that don’t want to do business. In short, every American corporation needs to file taxes, so these corporations should have an EIN.
How you can apply for an EIN
Because you now understand what an EIN is all about you may be wondering how you can apply for an EIN. Well, there are various ways you can use to apply for an EIN. The easiest and best way is to use an online EIN application process. You see, the IRS tax id LLC Formations can be processed online instantly.
You may also get an EIN by mailing or faxing the application for the EIN to the IRS. But you should always make sure that you check for the correct mailing address or fax number to avoid unnecessary delays.
Once the EIN is approved and issued to your business entity, it cannot be canceled. And, it’s also never reused regardless of the reasons. Even if your business doesn’t file federal tax returns, remember that the EIN can never be recycled or canceled. The IRS can close the business account if your business fails to open.
You can close the business account with the IRS, but you need to send a letter to them that includes several details. These include the business entity’s legal name, the address for your business, the business’s EIN, your reasons for closing the business account, and many more.
Nick Williams works for Acuity Training in the UK and helps on their time management training courses. Acuity also have a range of technical courses including advanced excel training.