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How to Apply for an EIN in 2022

How to Apply for an EIN

Written by Hasham Usman

November 25, 2021

In this article, you will learn what is EIN, Why do you need an EIN, and how to apply for an EIN.

What is EIN?

An EIN is like a Social Security Number for your business. An EIN stands for Employer Identification Number and, it is the tax identification number of the business.

As the name implies, an EIN is a number that the IRS issues to be able to tell businesses apart from one another. It is also called Federal Employer Identification Number.

How to Apply for an EIN

Why do you need an EIN?

Here are some reasons why you need an EIN:

  • If your business has or is going to have employees, you’ll need an EIN.
  • Any business that is either a partnership or a multi-member LLC has to have an EIN too.
  • Businesses need an EIN to pay taxes.

Businesses that are sole-proprietorships or single-member LLCs without employees do need an EIN, but there are plenty of reasons they also need an EIN: 

  • Most banks require an EIN to open a Business Bank Account. 
  • If you want to hire employers in the future, you will need an EIN. Getting an EIN early on lets you be prepared for the future.
  • An EIN can make your business appear more credible. Business owners usually prefer to work with other businesses as compared to just a person doing something on their own.
  • Having an EIN helps maintain separation between what is yours personally and what belongs to the business.

These are some reasons why you need an EIN.

How to Apply for an EIN

Applying for an EIN is super easy and free of cost. You do so through the IRS website and it can be done in five minutes.

Keep in mind, you are only able to use the IRS portal between the hours of 7:00am and 10:00 pm Eastern Standard Time.

Follow these steps to Apply for an EIN through the IRS website:

Step 01:

The first thing the IRS is to asks you is what type of legal structure are you choosing for your business.

The IRS gives you six options on the first page, with the option to view 23 other legal entity types. In this guide, I am going to get an EIN for a Limited Liability Company. So I select LLC as my business legal entity type.

Step 02:

In the next step, you have to select the state your business is physically located in and how many members your LLC is going to have. If you select one as the number of members, you will get a different confirmation screen than if you enter two or more. And this is actually because a single-member LLC works differently than a multi-member LLC. In my case, I have multi-member LLC.

Step 03:

In the third step, you have to explain why you are applying for an EIN. You will have five options:

  1. You are starting a new business.
  2. You have hired employees.
  3. To open a business bank account.
  4. You are changing the type of your organization.
  5. You have purchased an active business.

Hiring employees and Banking purposes is the two biggest reasons for applying for an EIN. 

Step 04:

After you select your business purposes you will be greeted with the question of who is the responsible party?

This is an excellent way of asking who is trying to get this EIN? Is it the owner, a member, or a manager of the LLC? Or is it a third party?

If you are trying to get an EIN on someone else’s behalf, you are a third party and you will have to fill out a bit of extra information.

How to Apply for an EIN as Non-Us Resident

If you are not a resident of the United States and do not have a Social Security Number (SSN), you can still apply for an EIN. You have to fill out  IRS Form SS-4

For submitting your application, you have to contact the IRS by calling at 267-941-1099. Monday through Friday between 7:00 a.m. and 10:00 p.m. Eastern Standard Time.

Conclusion

In this article, you will learn what is an EIN, Why do you need an EIN, and how to apply for an EIN, and how to apply for an EIN as a Non-Us Resident as well. 

Applying for an EIN yourself is not very easy if you are completely unfamiliar with the process so, the best thing for this is to hire a professional service.

There are many services available online, I prefer Micahguru Formation. Micahguru Formation is a young company as compared to its competitors but offers invaluable services.

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