Employer Identification Number (EIN)

What is an Employer Identification Number (EIN)?

An Employer Identification Number or EIN is a unique number that identifies a business entity. It is a permanent number that is never replicated for the use of another business. The EIN is also known as a Federal Tax Identification Number. 

What is the Employer Identification Number (EIN) for? 

The EIN can be likened to a fingerprint for businesses. It is assigned to a business for monitoring taxes and business identification. Additionally, an EIN can also be used as a requirement for opening a business bank account, when applying for a business loan, for licenses and permit business identification, filing state taxes, and electronic tax returns. 

I am a sole proprietor. Do I8 need an Employer Identification Number (EIN)?

If you are a sole proprietor of your business and you have no employees, you do not need an Employer Identification Number (EIN). This is because you can file your business income taxes as part of your income tax return. 

However, even as a sole proprietor, you will an EIN in case of any of the following: 

• Your business becomes a corporation. 
• You file for bankruptcy. 
• You form a business partnership with other individuals. 
• Your business becomes a multiple-member LLC.
• You shift your LLC to be taxed as a corporation or S corporation.

Who needs an Employer Identification Number (EIN)? 

In general, all businesses need to have their own EIN. According to the Internal Revenue Service (IRS), you will need an EIN if any of the following scenarios apply to you:

• Your business has employees.
• Your business is operating as a corporation or a partnership.
• You have a limited liability company (LLC) that is taxed as a corporation or S corporation.
• You file any of the following tax returns: Employment, Excise, Alcohol, Tobacco, and Firearms.
• Your business withholds taxes on wages and income paid to a non-resident alien.
• Your business has a Keogh plan. 
• Your business is involved in any of the following: trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers’ cooperatives, and plan administrators.

Is Employer Identification Number (EIN) the same as Tax ID number?

A tax ID number is a generic or general term that the IRS uses to refer to numbers that are allowed to be used for tax identification. 

To put it simply, an Employer Identification Number (EIN) is a type of tax ID number. 

There are three types of Tax ID Numbers that the IRS recognizes. These are: 

• Employer Identification Number (EIN) – identifies businesses
• Social Security Number (SSN) – for personal identification and tax purposes
• Individual Taxpayer ID Number (ITIN) – for people who are not eligible to have a Social Security Number (example: non-resident alien)

I already have an EIN but I misplaced it. What do I do? 

If you have already been issued an EIN for your business but have lost the number, you need not request a new one. There are steps that you can take to retrieve your EIN. 

• Request your EIN through a 147c letter.
• To ask for a 147c Letter (which is used for EIN verification), you can call the IRS Business & Specialty Tax Line at 1-800-829-4933. Their operating hours are 7:00 AM – 7:00 PM local time, Mondays through Fridays. Make sure to be prepared to answer some identifying information for security purposes. 
• Look for the computer-generated notice issued by the IRS when you applied for EIN. 
• You may have used your EIN to open a bank account or apply for a loan. Try to give your bank a call to ask for your EIN. 
• If you have previously filed a tax return for your business, you should be able to locate your EIN on the filed return.
• You may have used your EIN to apply for any state or local license. Try reaching out to your local agencies.

I think my EIN is being used by another business. What can I do about it? 

In case you suspect that someone is using your business name and EIN and might be submitting fraudulent W-2 forms or tax returns, report it to the IRS. Fill out and submit the following forms to the IRS:

• Form 14039-B
• Business Identity Theft Affidavit