All businesses and income earning individuals must pay taxes; it’s the law. With countless businesses and tax-paying citizens out there, how does the Internal Revenue Service (IRS) maintain an organized record of who each entity is, or what type of business it is paying taxes? The short answer is this: they use what is called an Employer Identification Number (EIN), also known as a federal tax ID number. This is a nine-digit number assigned by the U.S. federal government that is used to identify corporations and businesses as distinct tax-paying financial operations. This number can be obtained through several different filing services, such as IRS-EIN-Tax-ID.
Uses of an EIN
The EIN number is used by the IRS to ensure that partnerships, Limited Liability Corporations (LLCs), sole proprietorships, and other company types are fulfilling their tax obligations to the government. This number appears at the left corner of a W-2 form, and it is also used on all other official tax documents for that particular business.
Besides filing your company’s tax returns in April, this tax ID number also allows you to open a banking account for your business. This number is necessary if your business employs others, as well, for use in completing federal and state withholdings. Additionally, having an EIN allows your business not to provide any social security number(s) to clients or customers. Not that a tax ID number completely eliminates the possibility of identity theft, but it does help to protect the privacy of your business transactions.
EIN Application Process
Applying for an EIN number is not difficult. There are a number of online government documentation filing services that can help. For example, consider applying for your tax ID online today via the IRS-EIN-Tax-ID (Govt Assist) website. You should have your new EIN within 24 hours.
For further details, do not hesitate to contact IRS-EIN-Tax-ID. Their posted FAQ’s and other resources should be helpful in better understanding this process. Also ask about getting a tax ID number for trust after death.