What is an EIN?
An EIN, or Employer Identification Number, identifies your business entity to the federal government. In most cases, you will need an EIN if you are starting a new business or purchasing an existing business. You may also require an EIN, or a new EIN, if you’re making certain changes to your business, such as:
- Changing your business entity
- Creating a pension plan
- Representing an estate that operates a business following the owner’s death
What is the application process like (to obtain an EIN)?
In order to obtain an EIN, you must submit an application to the IRS. You can do this either by mailing in a form (Form SS-4) or by filling out an online application. Either way, you may wish to seek guidance on the application process so that you needn’t apply to make changes after receiving your EIN.
How soon can an EIN be used?
The answer to this question depends on the intended usage. If you elect to file your application online, you’ll receive your EIN immediately, but it can take up to about two weeks for full usability to set in. However, during those two weeks, you can use your EIN to complete necessary tasks to get your business up and running:
- You can apply for any necessary business licenses.
- You can open the bank accounts you will use to service your business.
- You can file tax returns (via mail only).
Once the two weeks have passed, and your EIN is fully functional, you can enjoy the convenience of filing electronic tax returns and sending payments electronically.
Choosing a Business Type
Before you can complete your application for an EIN, you need to know what type of business yours will be. Will you operate as a non-profit? As a for-profit LLC? Or are you a sole proprietor? Each type of business is governed by certain rights and responsibilities, and figuring out which is right for you can seem daunting at first. The same can be said if you are purchasing, or otherwise taking control of, an already existing business.
Don’t go it alone. Help is available to you, at the level you deem necessary, from consultation to utilizing a power of attorney. Partnering with an attorney will also help you to make your way through the additional steps necessary in creating or transitioning your business.