A federal employer tax identification number is important for many reasons. The EIN helps business to perform several important tasks, including hiring employees, filing tax forms related to firearms, tobacco or alcohol, and opening business bank accounts and lines of credit. This nine-digit social security number for your business also protects your personal assets to an extent by allowing you to keep your personal SSN private and potentially protecting your assets if your company finds itself in bankruptcy. Several kinds of businesses are required to obtain an employer identification number.
- Those selling firearms, tobacco or alcohol
- Those that hire employees
- Certain types of trusts or farmers’ cooperatives
- Those that file excise tax forms every year
Although not all businesses are required to apply for a federal tax ID number, it is beneficial for every business to do so as a means of separating your business from your personal life and showing your company as a professional entity. Even though not required, it is especially important if you work as a sole proprietorship.
How to Apply for Your EIN Number
The process to apply for an EIN is quite simple when you do so via IRS-EIN-Tax-ID. The application will ask you to identify the type of business you run and then to fill out some simple questions regarding its address, how you file your business taxes and a bit of personal information. Submitting the application takes just a few minutes. While most people receive a response and their nine-digit number within about three business days, some people even receive it the very next business day. You can track the status of your application and your employer identification number online while you wait, too.
Are you interested in learning more about how a federal tax identification number benefits your business? For more information, or to begin the application process, get in touch with IRS EIN Tax ID Filing Service.