What is an EIN and its Importance
An Employer Identification Number (EIN) is a nine-digit number that identifies your business to the IRS. After legally forming your business, apply for an EIN on the IRS website. The application is free and you get the EIN immediately. Use the EIN for paying taxes, hiring employees, opening business bank accounts, and getting licenses.
Importance of Keeping Your EIN Safe
Keep the EIN confidential. Use it to file taxes, open bank accounts, and get licenses and permits. The EIN always identifies your business entity even if dissolved.
Verification and Use of EIN
To verify an EIN, call the IRS Business & Specialty Tax Line. EINs have a different format than nine-digit Social Security numbers. Most entrepreneurs need help starting a company. Legally form the business first, then urgently apply for an EIN.
Next Steps After Obtaining Your EIN
Once you have an EIN, file taxes and do normal business. Applying early allows transactions like hiring or opening accounts. Understanding incorporation helps know the EIN’s role in identifying the business.
EIN for Non-Profits
EINs also identify non-profits, but they get tax-exempt status separately from the IRS. Each chapter of a national group needs its own EIN, although the central organization can file for group exemption. The IRS website verifies non-profits’ finances and status.