Federal Tax Id For The Self Employed
EIN is an Employer Identification Number that is mandatory for businesses but do self employed professionals or sole proprietorship firms need it? According to Internal Revenue Service , a sole proprietor or self employed professionals with DBA will not be required to file for EIN if they dont have any employees and are not filing any pension plan tax returns or excise tax returns. Yet, as a self employed with DBA or sole proprietor, you may require an EIN to fulfill specific purposes. If you are an independent contractor providing personal services then you will be required to provide EIN to your customers.
One of the most important reasons for obtaining an EIN is for opening a business banking account. An EIN is also known as a Federal Employer Identification Number and is used by credit and lending agencies to track business credit of sole proprietors. The advantage of having it means that you will be able to apply for business loans with ease as lenders prefer those with an established or good business credit. As a sole proprietor, having an EIN will enable hiring of employees to have a Solo 401 retirement plan or a tax-deferred pension plan like the Keogh Plan.
Does My Business Need To Reapply For A New Ein
Sometimes, your business may need to reapply for a new EIN. Rather than amending your business’s existing EIN, the IRS requires you to re-apply for one. According to the IRS, here are the most common reasons:
- You change the structure of your business, like incorporating your sole proprietorship or turning your sole proprietorship into a partnership.
- You purchase or inherit an existing business.
- You created a trust with funds from an estate.
- You are subject to a bankruptcy proceeding.
If your circumstances require you to reapply for an EIN, the application process is the same as if youre applying for one for the first time.
Who Needs To Obtain A Federal Tax Id
A Sole proprietorship with no employees can file under the owners social security number. A Limited Liability Company with a single owner can do the same all taxes are paid on an individual return.
A Federal EIN is required, however, when there are multiple members in the LLC. An EIN is also necessary if either a sole proprietorship or LLC is required to file excise tax. Other business structures need an EIN to separate their corporate taxes from personal taxes. The S Corporation, C Corporation, and non-profit all use the EIN. A partnership requires an EIN when filling out distribution forms for the IRS, even though no tax is paid by the partnership itself.
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Save The Document With Your Ein
Once you complete all sections of the application, the system will generate a new EIN that you can begin using immediately. An official IRS document will load onto your computer, which confirms that your application was successful and provides your EIN. Its a good idea to save a copy on your computer and to print one for your records in case you forget the EIN.
Ein Lookup: Finding Your Ein Is Simple And Easy
How do I find my EIN number?! Its so hard!
It can be frustrating to attempt to open a new business account or apply for financing, be asked for your EIN, and proceed to find out that youve lost it and all relevant paperwork with your EIN or Tax ID number on it .
However, there are several simple and easy ways to obtain your EIN even if you dont have a single tax return or your confirmation letter.
If you cant find your EIN or Tax ID number, look around for your confirmation letter, and if you cant find it, look through your relevant tax and business documents. If that doesnt work, simply give the IRS a call and provide the necessary information.
No matter what, obtaining your EIN should be easy. So, if youve lost it, and not having it is holding you back from moving forward with something important, dont sweat it.
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How Do I Find My Ein
If you have applied for and received an EIN but cannot find it, you can try the following to locate it:
- If you opened a business bank account using the EIN, call your bank. They may provide it to you with proper verification.
- Find copies of past tax returns in your companys files. The EIN is likely to be on the tax returns.
Need To Look Up Someone Else’s Ein
The nature of your business may require that you regularly look up EINs of other businesses, or you may want to look up another business’s EIN to validate their information.
If the company is publicly traded and registered with the Securities and Exchange Commission , you can use the SEC’s EDGAR system to look up such a company’s EIN for free. For nonprofit organizations, you can do an EIN lookup for them on Guidestar.
If a company is not registered with the SEC and is privately held, it will be more difficult since theres no central EIN database for these companies. Here are a few strategies you can use:
- Contact the company’s accountant or financing office and ask for the EIN, though they dont have to provide it.
- Try to find the companys W2, or any local or federal filings that may be online.
- Hire a service or use a paid database to do the EIN search.
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How To Change Or Cancel An Ein
Once you obtain an EIN for your business, that tax ID remains with your business for its entire lifespan. However, there are some situations where you might need a new business tax ID number.
Here’s when you’ll need to apply for a new EIN:
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You incorporate for the first time or change your business entity
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You buy an existing business or inherit a business
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Your business becomes a subsidiary of another company
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You are a sole proprietor and are subject to a bankruptcy proceeding
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You are a sole proprietor and establish a retirement, profit sharing, or pension plan
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You receive a new charter from your state’s Secretary of State
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There are changes to your ownership structure
The IRS has a detailed list of situations where you need a new EIN. A new EIN replaces your old EIN, so once you get the new tax ID, you would use that on tax returns and other business paperwork moving forward.
Note that more common changes, such as changes to your business name or address, generally don’t require a new EIN. But you should still report a business name change or location change to the IRS.
Your Companys Ein And Business Identity Theft Issues
Its easy for someone to get your business EIN, and they might be able to use it to steal your business identity. The IRS recognizes that a companys EIN may be the target of hackers and identity thieves. It suggests some ways to be watchful for identity theft related to taxes. Your business may have been hacked if:
- You receive tax notices about fictitious employees
- Your business tax return is accepted, but you havent file for that year yet
- You receive bills for a line of credit or a credit card that you dont have
The best way to check for business identity theft is to get a copy of your business credit report. Check it in detail for unexplained creditors and inaccurate or out-of-date information.
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How Do You Apply For A Federal Tax Id Number
If you have discovered that you need a federal tax ID number, you can apply for one via phone, fax, mail or online, though the IRS prefers you to do it online via its Internet application. If you do it this way, you receive your number instantly if your information is found to be valid within a few seconds of submission.To use the online application, you must have a valid taxpayer ID or social security number. If you fax your application, youll receive your federal tax ID number back via fax within four business days. For mail applications, it typically take around four weeks for the IRS to verify and provide your number. Phone applications are only accepted from international applicants.
How To Do An Ein Lookup Online
You can locate a lost or misplaced EIN by the following
If you are trying to find the EIN of business other than yours there are a few options.
Paid Method of Finding an EIN For a Business
Try purchasing a business credit report from any of the major credit agency.
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Electronic Data Gathering Analysis And Retrieval System
Using the Electronic Data Gathering, Analysis, and Retrieval System is the easiest way to search for a federal tax ID number.
Maintained by the SEC, the EDGAR system is a database that includes information about for-profit companies. This online service is completely free.
The EDGAR database includes several forms that may contain a business’s EIN, including the 8-K, 10-K, and 10-Q forms.
Before you start your EDGAR search, you should keep in mind that searching just the first few letters of a business’s name will provide you better results, as many businesses are not listed under their full names.
How To Apply For An Ein
If your business is based in the United States, you can apply for an EIN in one of three ways: online, by fax, or by mail. An online application is the speediest: you get your EIN immediately. Fax takes several days and mail takes five to six weeks. Foreign businesses can apply via fax, mail or by phone . Get the details in our article How to Get an EIN .
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Lost Or Misplaced Your Ein
If you previously applied for and received an Employer Identification Number for your business, but have since misplaced it, try any or all of the following actions to locate the number:
- Find the computer-generated notice that was issued by the IRS when you applied for your EIN. This notice is issued as a confirmation of your application for, and receipt of an EIN.
- If you used your EIN to open a bank account, or apply for any type of state or local license, you should contact the bank or agency to secure your EIN.
- Find a previously filed tax return for your existing entity for which you have your lost or misplaced EIN. Your previously filed return should be notated with your EIN.
- Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at . The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistor will ask you for identifying information and provide the number to you over the telephone, as long as you are a person who is authorized to receive it. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.
What Information Is Needed To Apply
The legal business name, location and the name and address of a responsible party who can answer questions that might arise this would usually be an officer or owner of the company. This person also provides his/her social security number on the application form.
Also required is a general statement about the type of business activity the company will be involved in as well as the business structure the State where the company is incorporated, and the reason for application and an estimate of the number and type of employees expected.
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Get Detailed Information On Nonprofits
Another helpful resource is GuideStar. The organizations database includes information on over 1.8 million IRS-recognized, tax-exempt companies. Users can register for free to check a nonprofit’s annual reports, obtain its contact information or conduct an EIN lookup. A similar resource is Melissa Data, which provides information on non-profit organizations.
There are many other ways to verify the EIN of a business. It all comes down to your particular situation. For example, if you need to check your former employer, you can find his tax ID number on one of your W-2 Tax forms or contact the accounting department. A more expensive option is to hire a private investigator.
References
- To verify a private company’s TIN, there are many for-fee services, including Knowx.com, FEINSearch.com, and LexisNexis.com.
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Comparison To Social Security Numbers
A social security number is a nine-digit number assigned to US citizens and permanent residents. It is used by the US government to track your earnings, taxes, and employment, as well as eligibility for certain social benefits after retirement. SSNs are considered sensitive information and can be used to perpetrate identity theft, thus they are only shared in limited situations, for example, with employers, government entities, insurance agencies, and banks. SSNs can be validated as to origin and state/year of issuance.
The EIN serves a similar administrative purpose as a SSN, but for a business entity rather than an individual person. In some cases, such as a sole proprietorship, an SSN may be used as a business Tax ID without applying for a separate EIN, but in order to hire employees or establish business credit, an EIN is required. Unlike a SSN, an EIN is not considered sensitive information and is freely distributed by many businesses by way of publications and the internet.
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Finding The Id For Your Employer
Access The Edgar Database
EDGAR provides data on foreign and domestic companies that are legally required to file forms with the SEC . This database includes more than 21 million filings. Users can access it for free.
For a quick EIN lookup, go to SEC.gov and click More Search Options below the search bar on top of the homepage. Enter the organization’s name in the designated field under Search Company Filings. Another option is to access EDGAR search tools and search by filing date, CIK , ticker symbol and other criteria.
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Is A Tin Number The Same As An Ein
An employer identification number is a type of tax identification number . An EIN is used by employers to open a business bank account, apply for a business loan, for business licenses and permits, and for reporting and paying federal payroll taxes.
Your business needs an EIN if you:
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Have employees
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Operate your business as a corporation or partnership
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File employment, excise, or alcohol, tobacco and firearms tax returns
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Withhold taxes on income paid to a resident alien
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Have a Keogh plan
What Do I Need A Tin For
Once you know what your TIN is, you may be wondering when and why youll need it. You as a taxpayer will need to provide your TIN on all tax returns and other documents sent to the IRS. Even if you do not have a number issued to you by the IRS, your SSN must be on forms submitted to it. You have to provide your taxpayer identification number to others who use the identification number on any returns or documents that are sent to the IRS this is especially the case for business transactions that may be subject to Reverse-Charge procedures. This may also be the case when you are interacting with a bank as an entity.
Aside from using your EIN for tax returns and business to business transactions also known as B2B youll need to keep your SSN in mind for other purposes too. As well as for personal tax returns, your Social Security number is vital in daily life, because without it you wont be able to get a job or collect Social Security benefits if necessary. It is also a confidential piece of identity information, so avoid just telling anyone what it is. Keep it safe with other important documents.
Click here for important legal disclaimers.
- 06.12.19
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