Introduction
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is issued by the Internal Revenue Service (IRS).
This is a unique nine-digit number assigned to a business for the purpose of identifying it when dealing with federal tax matters, such as hiring employees, opening a business bank account, and performing other compliance-related tasks. It functions similarly to a Social Security Number (SSN), but it is used for identifying businesses rather than individuals. Even businesses owned by people from other countries, such as Limited Liability Companies (LLCs), corporations, or partnerships, that are registered in the United States, generally require an EIN.
Who Needs an EIN?
You must apply for an EIN if your business:
Plans to hire employees.
Is structured as a corporation or partnership.
Withholds taxes on income paid to non-resident aliens.
Needs to open a bank account in the United States.
Files certain federal tax returns, such as those related to excise, employment, alcohol, tobacco, or firearms.
Documents Required for EIN Application
The IRS does not request many documents during the initial application, but you must have the following:
Company Formation Documents
Articles of Organization for LLCs.
Articles of Incorporation for Corporations.
Responsible Party Information
Name, Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN), or passport details if you are a foreign owner.
The responsible party is the person who manages the business and controls its funds.
Business Details
Legal name of the company.
Trade name, if applicable.
U.S. business address, or foreign address if necessary.
Type of business entity, such as LLC, Corporation, Partnership, or Sole Proprietor.
Step-by-Step Process to Apply for an EIN
There are four main ways to apply for an EIN:
1. Apply Online (Fastest – Only for entities with a U.S. address)
Visit the IRS EIN Assistant: IRS EIN Online
This service is available Monday through Friday, from 7 a.m. to 10 p.m. Eastern Time.
At the end of the session, you will receive the EIN in PDF format immediately.
Note: Only applicants with a U.S. business address and an SSN or ITIN can use this method.
2. Apply by Fax
Complete Form SS-4 and fax it to the appropriate IRS number based on your location.
Processing time: approximately 4 business days.
The EIN is sent back via fax.
3. Apply by Mail
Send the completed Form SS-4 to:
Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999 (for international applicants).
Processing time: approximately 4 to 5 weeks.
4. Apply by Telephone (International Applicants Only)
Non-U.S. residents who do not have an SSN or ITIN can call the IRS at 1-267-941-1099 (6 a.m. to 11 p.m. Eastern Time, Monday through Friday).
Answer questions from Form SS-4.
The EIN is issued immediately over the phone.
5. Special Note for Foreign Companies / Owners
Foreign business owners who do not have an SSN or ITIN can still obtain an EIN.
They must complete Form SS-4 carefully and write "Foreign" in the section where the SSN is requested.
The telephone method is often the fastest option for international businesses.
6. Uses of EIN
Once you receive an EIN, it is used for:
Filing federal and state taxes.
Opening a U.S. bank account.
Applying for business licenses.
Hiring employees and paying payroll taxes.
Vendor contracts, import, and export licenses.
Conclusion
Obtaining an Employer Identification Number (EIN) after establishing a business in the United States is an essential legal and tax requirement for both U.S. residents and foreign business owners. Similar to how a Social Security Number (SSN) functions for individuals, an EIN serves as a unique identifier for your business with the U.S. Internal Revenue Service (IRS).
Without an EIN, a business is unable to:
Open a U.S. business bank account, which is crucial for establishing credibility and facilitating smooth financial transactions.
Submit federal or state tax returns, which could result in legal complications.
Legally employ workers and adhere to regulations concerning payroll and social security taxes.
Obtain necessary business licenses and permits, which are required in various industries such as healthcare, pharmaceuticals, manufacturing, and information technology services.
The process of obtaining an EIN is straightforward, and the IRS provides multiple options for application, including online, fax, mail, and phone, particularly for international applicants.
For U.S. companies, applying online is the fastest method and provides the EIN immediately. For foreign-owned businesses, using the phone is the most efficient approach, while fax and mail take more time. It is also important to note that foreign business owners do not need a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) to apply for an EIN.
Once an EIN is obtained, it remains with the business permanently. It does not expire or change, even if the company changes its name or relocates to another state. This stability makes the EIN a vital component of ongoing business compliance.
In summary, acquiring an EIN is more than a legal obligation—it is the essential key that enables a business to operate within the U.S. economy.It links the company to the tax system, facilitates banking and hiring processes, and fosters trust with clients, suppliers, and government entities. Therefore, every business owner, whether local or international, should obtain an EIN promptly after registering their business to ensure legal compliance, smooth operations, and long-term success in the U.S. market.
eStartIndia specialize in assisting numerous businesses with seamless incorporation in the USA. Connect with our experts at eStartIndia via a call to address all your inquiries effectively.
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