An Employer Identification Number (EIN) — also sometimes called a Federal Taxpayer Identification Number — is a nine-digit number used by the Internal Revenue Service (IRS) to identify businesses and certain other entities. Business owners use an EIN to conduct activities that would otherwise require a Social Security Number (SSN).
Many entrepreneurs have questions about EINs and whether or not they need one. So, we thought we’d dive a little deeper and provide a few answers to clear up any confusion.
Who needs an EIN ?
The guidelines used by the IRS for determining if an Employer Identification Number (EIN) is required implies that most businesses must have an EIN. Besides, acquiring an EIN is an important step to establishing your business and will help you keep your legal and financial matters in order.
As soon as you launch your business, you’ll need to apply for an EIN. You can wait until you’ve registered your company in the state where you plan to do business, but you’ll need an EIN before you can open a business bank account.
According to the IRS, your business must have an EIN if:
- Your company has employees
- Your business is a partnership or corporation
- You have filed or will file tax returns for any of the following: alcohol, tobacco, firearms, employment, or excise
- You withhold taxes on income paid to a non-resident alien
Or if you’re involved with any of the following:
- Trusts (except with certain Exempt Organization Business Income Tax Returns) grantor-owned revocable trusts, IRAs, or estates
- Plan administrators
- Farmers’ cooperatives
- Real estate mortgage investment channels
- Non-profit organizations
Beyond filing taxes, you may also need an EIN to:
- Open a bank account in the name of your business
- Apply for a credit card in the name of your business
- Apply for business permits
- Apply for a business license
- Apply for a business loan
- Furnish independent contractors with a Form 1099
Another reason you may need to apply for an EIN is for your privacy. For example, if you’re a contractor who works with a large number of clients, disclosing your Social Security Number may expose you to identity theft.
Instead, apply for an EIN. Doing so won’t eliminate your chances of falling victim to identity theft, of course, but it will likely keep the thief from accessing your personal accounts.
Connect ATOZ Startups team for best consultation t get an EIN.
How Does a Non-U.S. Citizen Obtain an EIN?
First, you will be required to fill out and submit an SS4 Form, just as any U.S. resident would. The address listed on the SS4 Form can be anywhere in the world. The IRS is only interested in knowing where the business is operating.
In order to obtain an EIN online, you will need a Social Security Number or U.S. address. However, the application for an EIN can be still mailed or faxed to the IRS if you do not meet these requirements. In this case, you will be required to provide a copy of the passport for the person listed as the responsible party.
Be very careful when applying for your EIN, as there are potential drawbacks to dealing with the IRS on your own.
If the application is not prepared correctly or is transmitted illegibly, the IRS may fax you a letter of rejection. This letter of rejection can sometimes take weeks to receive; once it is received, you are welcome to reapply for the EIN, but you will have to start the process from the beginning.
Our dedicated team in the Filings Department will be responsible for making sure your SS4 application is prepared and filed correctly in order to ensure the timely approval of your Federal Tax ID Number.
If there are any problems, we will call the IRS to resolve the issue, thus saving you time and energy so you can concentrate on your new company.
We can typically obtain an EIN for any international client in seven to twenty business days once we receive a signed SS4 form.
The responsible party controls, manages or directs the applicant’s entity and the distribution of its funds and assets. The responsible party for a corporation must be an actual person, but this person can be an officer of the corporation and he/she can live anywhere in the world.
The responsible party of an LLC can be a member or managing member from anywhere in the world. The responsible party simply signs the document and emails or faxes it back to us. We will follow up with the IRS on your behalf if the EIN is not received in a timely fashion. This can save you hours of frustration, since contacting the IRS can be a lesson in futility at times.
If you would like to apply for a Federal Tax ID Number for a new or existing company, please contact us, regardless of whether or not you have a U.S. Social Security number, ITIN or U.S. address. We can help alleviate the hassle of dealing with an often uncooperative and unfriendly IRS. Please Contact by ATOZ Startups Live Chat.