Applying for a Federal Identification Number, often known as an Employer Identification Number (EIN), is a crucial step for businesses in the United States. The good news is, you can obtain your EIN directly from the Internal Revenue Service (IRS) online, quickly and without any cost. This article will guide you through the process of getting your Federal Identification Number Online, ensuring you have all the information needed for a smooth and successful application. It’s essential to be aware that while the IRS provides this service for free, some third-party websites may charge a fee. Always apply directly through the official IRS website to avoid unnecessary costs.
What is a Federal Identification Number (EIN)?
A Federal Identification Number, or EIN, is a unique nine-digit number assigned by the IRS to businesses operating in the United States. Think of it as a Social Security number for your business. It’s used to identify your business entity for tax purposes. You’ll need an EIN to open a business bank account, apply for business licenses and permits, and, most importantly, to file your business taxes with the federal government.
How to Get Your EIN Online for Free
The IRS provides a convenient online tool to apply for and receive your EIN immediately. Here’s how it works and what you need to know before you start:
Eligibility for Online Application
To use the IRS online EIN application, you must meet specific criteria:
- Principal Business Location: Your business’s primary place of business must be located in the United States or U.S. territories.
- Responsible Party: You must be the “responsible party,” meaning you are the person who controls, manages, or directs the entity and the disposition of its funds and assets, or you are an authorized representative.
- Taxpayer Identification Number: You, as the responsible party, must have a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN).
You are not eligible to apply online if your principal business location is outside of the United States. In this case, you will need to apply for your federal identification number by phone, fax, or mail, as detailed on the IRS website. Government entities are also not eligible to apply online using this specific tool.
What You’ll Need
Before you begin the online application, make sure you have the following ready:
- Information about your business, including its legal structure (e.g., LLC, corporation, partnership).
- The Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) of the responsible party.
- Basic details about the nature of your business activities.
Application Process and Key Considerations
The IRS online EIN application is designed to be completed in a single session. Keep these points in mind:
- Single Session: You must complete the entire application in one sitting as you cannot save your progress and return later.
- Time Limit: The application session will expire after 15 minutes of inactivity. If this happens, you will need to restart the application from the beginning.
- Immediate Confirmation: If your application is approved, you will receive your EIN immediately online.
- Print Your Confirmation: It’s crucial to print your EIN confirmation letter once you receive it and keep it for your records. This confirmation serves as proof of your EIN for various business and tax-related activities.
Important Information About Your EIN
When Do You Need an EIN?
Generally, businesses and organizations require a federal identification number for various reasons, including:
- Hiring Employees: If you plan to hire employees, you’ll need an EIN to handle payroll taxes and related obligations.
- Operating as a Partnership or Corporation: Partnerships and corporations, by their legal structure, are required to have an EIN.
- Paying Sales and Excise Taxes: Businesses that need to pay sales or excise taxes will need an EIN.
- Changing Business Structure or Ownership: If your business undergoes significant changes, such as a change in structure or ownership, you might need a new EIN or need to update your existing one.
- Administering Trusts, Retirement Plans, and Estates: Certain types of trusts, retirement plans, and estates also require an EIN for tax administration.
Once you obtain your federal identification number, remember that you are obligated to file the necessary tax returns or information returns as required by the IRS.
Availability and Daily Limits
The IRS online EIN application tool is available:
- Hours: Monday to Friday, from 7:00 a.m. to 10:00 p.m. Eastern Time.
- Daily Limit: You are limited to applying for only one EIN per responsible party per day.
Forming Your Entity Before Applying
It’s highly recommended that if you are forming a legal entity like an LLC, partnership, corporation, or tax-exempt organization, you first form your entity through your state government before applying for an EIN. Failing to do so may cause delays in processing your EIN application.
Other Application Methods
If you are not eligible to apply for your federal identification number online, the IRS provides alternative methods. You can apply by phone, fax, or mail. Details for these methods can be found on the IRS website.
Beneficial Ownership Reporting (FinCEN)
Be aware that certain corporations, LLCs, and other entities may have a requirement to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who ultimately own or control the company. Check the FinCEN website to determine if your business has this reporting obligation.
Getting your federal identification number online is a straightforward process offered by the IRS. By following these guidelines, you can secure your EIN quickly and efficiently, ensuring your business is ready for operation and tax compliance. Remember to always use the official IRS website for your application to avoid any potential fees or complications.
