A Step-by-Step Guide on How to Obtain an EIN/FEID/Tax ID

If you’re starting a business, it’s essential to understand the various legal requirements involved. One such requirement is obtaining an EIN, also known as an Employer Identification Number. This number is also commonly referred to as a Federal Employer ID Number (FEID), Tax Identification Number, or Tax ID. An EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify your business entity for tax purposes. In this blog post, we will provide a comprehensive guide on how to obtain an EIN, ensuring that you navigate the process smoothly and efficiently.

Step 1: Determine Eligibility:

Before you begin the application process, it’s crucial to determine whether you are eligible for an EIN. Generally, any business entity that has employees or is required to file specific tax returns is eligible for an EIN. This includes sole proprietorships, partnerships, corporations, and limited liability companies (LLCs).  Having an EIN for one business does not permit its usage for another business owned by the same Member(s) or Shareholder, so typically, an EIN is needed for each entity.  Otherwise, using the same number will cause confusion when it comes time to file taxes.

Step 2: Prepare the Necessary Information:

Gather the following information required to complete the EIN application:

1. Business Entity Type: Determine the specific type of entity you are applying for, such as a sole proprietorship, partnership, corporation, or LLC.
2. Responsible Party Information: Identify the individual who will act as the responsible party for the EIN application. This person should have the authority to make decisions for the business and provide their name, social security number (SSN), or individual taxpayer identification number (ITIN), and contact information.
3. Business Details: Prepare details about your business, including the legal name, trade name (if applicable), physical address, mailing address, and the date the business was established.
4. Purpose of the EIN: Clearly state the reasons for obtaining an EIN, whether it’s to start a new business, hire employees, or open a bank account.

Step 3: Choose the Application Method:

There are three ways to apply for an EIN: online, by mail, or by fax. The online application method is the fastest and most convenient. However, if you prefer the alternative methods, you can submit Form SS-4 by mail or fax it to the IRS.

Step 4: Online Application Process:

To apply for an EIN online, follow these steps:

1. Access the IRS website: Go to the official IRS website and search for the EIN application form (Form SS-4).  See https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers.
2. Complete the application: Provide all the necessary information as requested, ensuring accuracy and clarity.
3. Review the application: Carefully review the application before submission to avoid any errors or omissions.
4. Submit the application: Once you are confident in the accuracy of your application, submit it electronically. The system will generate your EIN immediately upon successful completion.

Step 5: Alternative Application Methods:

If you choose to apply by mail or fax, follow these steps:

1. Obtain Form SS-4: Download Form SS-4 from the IRS website or contact the IRS to request a physical copy.
2. Fill out the form: Complete the form using the information you gathered in Step 2. Ensure legibility and accuracy to prevent delays.
3. Review the form: Thoroughly review the form to verify that all information is accurate and complete.
4. Submit the form: Mail or fax the completed form to the appropriate IRS office as indicated in the instructions.

Step 6: Retain Your EIN:

Once your EIN is issued, it is crucial to keep it in a safe place as you will need it for various business activities. Make sure to provide your EIN to relevant parties, such as financial institutions, the IRS, and state and local agencies, as required.

Conclusion:

Obtaining an EIN is a vital step in establishing your business and complying with tax regulations. By following this step-by-step guide, you can navigate the EIN application process with confidence. Remember to gather the necessary information, choose the appropriate application method, and retain your EIN for future use. If you have any doubts or questions along the way, it’s advisable to consult with a qualified attorney or tax professional for guidance.  If you need assistance, please contact The Woodlands Law Firm today!