Introduction
If you’re starting a business in the United States, you will need an Employer Identification Number (EIN). This unique nine-digit number is assigned by the Internal Revenue Service (IRS) and used to identify businesses for tax purposes. In this article, we’ll provide you with a step-by-step guide on how to apply for an EIN number online, common mistakes to avoid, and tips from successful applicants.
Step-by-Step Guide on How to Apply for EIN Number
Before we get into the details of how to apply for an EIN number, let’s cover some basics. An EIN number is required for most types of businesses, including corporations, partnerships, LLCs, and sole proprietors who have employees. Obtaining an EIN number is free and can be done online, via fax, or through the mail.
Guidelines for Applying for EIN Number
The IRS offers three methods for applying for an EIN number: online, fax, or mail. We recommend applying online as it is the quickest and easiest method. You’ll need to have a valid Taxpayer Identification Number (TIN), such as a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), to apply.
Detailed Steps on How to Apply for an EIN Number Online
1. Visit the IRS website to begin the application process. You will need to navigate to the EIN application page.
2. Choose the appropriate entity type for your business (e.g. sole proprietorship, corporation, partnership, etc.) and fill out the corresponding form completely.
3. Review the information you entered to ensure that it is correct, and then submit the form. You will receive your EIN number immediately upon submission.
Tips on How to Fill Out Each Section of the Application Correctly
To avoid errors and delays in obtaining your EIN number, we recommend the following tips:
- Choose the correct entity type for your business as it will determine the application form you should complete.
- Ensure that your business name and address are correct and match your official records.
- Provide accurate information about the responsible party, such as their name, SSN, and contact information. The responsible party is the person who owns or controls the business.
- Ensure that your business activity information is correct.
Common Mistakes to Avoid When Applying for EIN Number
While obtaining an EIN number is a straightforward process, some common mistakes may delay or complicate the process. These mistakes include:
- Providing the wrong business name or address
- Providing incorrect or incomplete information about the responsible party
- Choosing the wrong entity type
- Submitting multiple EIN applications for the same business
Explanation of the Consequences of Providing Incorrect or Misleading Information
Providing incorrect or misleading information on your EIN application may result in the rejection of your application or delay in obtaining your EIN number. Additionally, providing false information to the IRS may result in civil or criminal penalties, including fines and jail time.
Detailed Explanation of Each Mistake and How to Avoid Them
To avoid common mistakes when applying for an EIN number, you should:
- Ensure that your business name and address match your official records.
- Provide accurate information about the responsible party, including their name, SSN, and contact information.
- Choose the correct entity type for your business.
- Submit only one EIN application for your business.
Pros and Cons of Different Application Methods for EIN Number
As we mentioned earlier, there are three ways to apply for an EIN number: online, fax, and mail. Here are the pros and cons of each method:
Pros and Cons of Using an Online Third-Party Service to Apply
Third-party services, such as LegalZoom, offer a convenient and efficient way to apply for an EIN number. However, they typically charge a fee for their services, which can range from $50 to $300. Additionally, using a third-party service may limit your ability to communicate directly with the IRS if issues arise.
Pros and Cons of Applying Directly to the IRS Website
Applying for an EIN number directly through the IRS website is a quick and free option. However, the website can be difficult to navigate, and technical glitches may occur. Customer support is also limited, which can make resolving issues challenging.
Tips from Successful Applicants
We interviewed several successful EIN applicants to learn from their experience. Here are a few tips:
- Double-check your application before submitting it.
- Be patient as it may take up to two weeks to receive your EIN number.
- If you run into any issues, contact the IRS customer service for assistance.
EIN Number Frequently Asked Questions
Here are some commonly asked questions about EIN Number:
What is an EIN number?
An EIN number is a nine-digit unique number assigned by the IRS to identify businesses for tax purposes.
Who needs an EIN number?
Most types of businesses, including corporations, partnerships, LLCs, and sole proprietors with employees, will need an EIN number.
How much does it cost to apply for an EIN number?
Applying for an EIN number is free.
How long does it take to receive an EIN number?
Typically, it takes up to two weeks to receive an EIN number after submitting your application.
Conclusion
In conclusion, obtaining an EIN number is a crucial step for any business operating in the United States. We hope that this step-by-step guide and common mistakes to avoid will help simplify the process. Remember to always double-check your application for accuracy and contact the IRS customer service for assistance if needed.
