Why Employer Identification Number (EIN) required?
Any business whether it’s a new establishment or undergoing refurbishment need to obtain an EIN (Employer Identification Number) from the IRS (Internal Revenue Service). Obtaining EIN for any business settlement is restricted to U.S territories. An EIN is a unique nine-digit number through which your business is recognized and used for the federal tax. An EIN number is similar to SSN (social security number) but EIN could be used exclusively for a business purpose only. EIN helps to open a business bank account, filing tax returns, and also helps to apply for a business license.
However, sole proprietors are not required to obtain an EIN. It is required by that business who recruits employees. Even those who runs a business in a partnership or operates as a corporation need EIN. Even nonprofit business such as churches, philanthropic associations, trusts, and clubs are also required to obtain EIN for paying taxes if any. It is mandatory for all employees to have EIN number as it is a Tax ID number.
Applying for EIN is not at all tedious. You can apply EIN online via the IRS-EIN assistant. Once the application fulfills all the required fields, it will be validated and an EIN will be issued. The biggest advantage is that the service is absolutely free. The EIN can be obtained by applying through FAX or mail.
There are some exceptions such as if you are applying from outside the USA and your business is incorporated outside the USA than you are not eligible to apply for EIN. For further clarification please call our helpline number.