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The Importance of The Employer Identification Number

October 13th

EINIf you are considering starting a small business, it is important to understand what the Employer Identification Number (EIN) is and how to use it when it comes to the business of preparing your yearly tax statement for the IRS and avoiding IRS penalties. Just like every American citizen comes equipped with a Social Security number, every business registered in the United States of America has an EIN.  This number is issued to entities that are required to report employment taxes or give tax statements to their tax lawyers or annuitants. In plain English, this basically refers to any sort of business.

What is the Employer Identification Number?

 The Employer Identification Number is a nine-digit number that is issued by the IRS. The form of the EIN is 00-0000000. This number is used to identify the tax accounts of employers and others who might not have employees but rely on the services of independent contractors. You will use your EIN on all of the items that you send to the IRS and the Social Security Administration. This helps differentiate your business from other businesses in a clear, concise way.

If you have a business and do not yet have an EIN, you must apply for one online. Visit the IRS website at www.IRS.gov, and then click on the Apply for an Employer Identification Number link. The IRS will then be in contact with you shortly to give you your own unique EIN. Just like Social Security numbers, every business should not have more than one EIN. In the event that you have ended up with multiple EINs, be sure to contact the IRS so that they can tell you which one to use.

 
 
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