“The option to handle the tax ID application over the phone is only open to international applicants. © tetmc/iStockphoto
According to the U.S. Census Bureau, there were 32.5 million businesses in the country in 2016, 76 percent of which were self-employed people without employees or payrolls [source: Kehoe]. The IRS uses federal tax ID numbers, also known as Employer Identification Numbers or EINs, to identify businesses. Applying for an EIN is free and relatively simple. The IRS accepts applications for EINs in four ways: online, by fax, through the mail and over the phone.
No matter which option you choose, you’ll need the same information, beginning with your business name and address. You’ll also need the type of business, such as sole proprietor, corporation, non-profit agency, farmers’ cooperative or trust. Then identify the reason you need an EIN. For instance, are you starting a new business? Hiring new workers? Creating a pension plan? If you have employees, record the number you expect to have during the next year. It’s also necessary for you to specify your field of business and any merchandise, products or services you offer.
For many businesses located within the U.S. or its territories, the online application process is fastest and most convenient. The person who is submitting the form is typically a responsible party in the business, such as an owner, partner or principal officer. The applicant must have individual identification, such as a Social Security number.
To apply online, use the EIN Assistant page accessible on the IRS website, and have all of your paperwork ready. The process must be completed in one sitting, because for security purposes, the session quits if you’re inactive for 15 minutes. Once you’re complete, however, you receive your EIN immediately. You can use it to open bank accounts or get licenses, but if you want to file an electronic tax return, you’ll have to wait. It takes about 2 weeks for an EIN to become permanently established in the system.
If you decide to fax your information to the IRS, complete Form SS-4 and submit it to your state’s IRS fax number. The document is reviewed quickly, and, if it’s completed properly, the IRS will fax you your EIN within four business days.
Perhaps you’re old school and want to send the paperwork through the mail. You’ll also use Form SS-4, but don’t look for your EIN to arrive for about four weeks. Only international applicants are allowed to apply by telephone. Just know the phone number is not toll-free. An authorized agent of the company needs to answer all the questions on Form SS-4. You’ll get the EIN over the phone, so don’t forget to write it down! Afterward, you may still have to mail in Form SS-4.
Millions of new American businesses are started up each year. If you’re one of this crowd, no doubt you’ll have a lot on your plate. Don’t neglect your tax identification number, however. You’ll need it to report your earnings to the IRS.
Originally Published: Dec 19, 2014
Get Tax ID FAQ
How do you get a tax ID number?
Your tax identification number can be your Social Security number, employer identification number, individual taxpayer number, or a few other types of unique identifying numbers. If you aren’t sure if you need to get a tax ID number, you can use the IRS’s Interactive Tax Assistant on the IRS website, which will help you determine if you need to file an application.
Do I need a tax ID number?
Yes, you need to have a tax ID number. You’ll need this piece of information in order to file your taxes and for other pieces of IRS communication, like exemptions or treaty benefits.
What does a tax ID number cost?
You don’t have to pay anything to get a tax ID number. You can simply use your Social Security number, if you have one. If you need an employer identification number (EIN) or another specific type of tax ID number, it’s free to apply and receive these from the IRS.
How do I get a free EIN number from the IRS?
You can apply for an EIN right on the IRS website. The process is free, with no application fees or any cost at all.
Can you apply for a EIN online?
Yes, you can apply for an EIN online. Just visit the IRS website and you can complete the process from your computer.
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- Internal Revenue Service. "Do You Need an EIN?" Oct. 10, 2014. (Oct. 27, 2014) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Do-You-Need-an-EIN
- Internal Revenue Service. "EIN Assistant." (Oct. 27, 2014) https://sa.www4.irs.gov/modiein/individual/index.jsp
- Internal Revenue Service. "Employer ID Numbers (EINs)." Oct. 24, 2014. (Oct. 27, 2014) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-EINs
- Internal Revenue Service. "Form SS-4." January 2010. (Oct. 27, 2014) http://www.irs.gov/pub/irs-pdf/fss4.pdf
- Internal Revenue Service. "Form SS-4 General Instructions." (Oct. 27, 2014) http://www.irs.gov/instructions/iss4/ch01.html
- Internal Revenue Service. "How to Apply for an EIN." Oct. 10, 2014. (Oct. 27, 2014) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN
- Nazar, Jason. "Infographic: The State of U.S. Small Businesses." Business Insider. September 10, 2013. (Oct. 27, 2014) http://www.businessinsider.com/infographic-the-state-of-us-small-businesses-2013-9
- U.S. Census Bureau. "Statistics about Business Size (including Small Business) from the U.S. Census Bureau." August 22, 2012. (Oct. 27, 2014) http://www.census.gov/econ/smallbus.html