Before your business becomes operational, you have to ensure that all paperwork or documentation is handled so you are in line with the law. When it is time to get a permit or license, you need to provide EIN (Employer Identification Number). This is also referred to as your tax ID number.
EIN is composed of 9 unique numbers similar to your SSN (Social Security Number). Keep in mind though that not all business needs EIN but if the nature of your business requires you to apply tax id (ein), here’s the step-by-step guide:
Step 1: Visit the IRS (Internal Revenue Service) website
You can choose to apply via phone, mail or fax but IRS prefers that you apply online. If you apply online, you simply visit the IRS website and then access the “EIN Assistant” page. After, you can click on the “Begin Application” button to get started.
Step 2: Identify the tax and legal structure of your business
The next step involves identifying the tax and legal structure of your business as well as the tax reporting requirements. For instance, if your business setup is a corporation, you should click the “Corporations” button. After choosing the structure, you click “Continue”.
Step 3: State the reason for requesting an EIN
Following the identification of tax and legal structure, the next step is to state the reason for requesting an EIN. There will be choices like the following:
- If you hired employees
- If you started a new business
- If you need EIN for credit or banking purposes
- If you changed your type of organization
- If you purchased an active business
In most cases, the reason is “Started a New Business “. If this is the same for you, it is crucial to click the button and then look for “Continue”.
Step 4: Designate a contact person for the business
You need to designate a “Responsible Party” or a contact person. This person will in the database of the IRS for tax matters. If in case the IRS sends a letter, they will send it to the contact person or the “Responsible Party”.
For instance, if you declared an LLC entity taxed as a sole proprietorship or partnership, an individual will act as the contact person. You have to remember though that you can identify any member as the primary member. To designate a member, click on the “Individual” button.
Step 5: Give the business location
Whatever type of business entity you have, you need to give a physical address. This address should be the US address. Aside from the business location, you are bounded to give a phone number. You should click the “Continue” button.
Step 6: Provide other information
If you are prompted to provide other information like trade name and start date information, you should comply. You should also expect questions regarding vehicles, federal excise tax returns, gambling, alcohol, firearms, and tobacco. In the end, do not forget to click on the “Continue” button.
Step 7: Verify information
The last page will summarize all the information you provided. With this, you have to check the information for any errors. If there are no errors, do not forget to click “Submit” to receive your EIN.