Business heads and employers can apply for an Employer Identification Number (EIN) from the IRS to get a single nine digit number that identifies the business organization. The title is taken on to use for the work of the business.

The number is a federal tax identification number used on all IRS tax forms.

One American Business

The EIN is given to businesses that do their business in the United States or reside in the country. A business set up in a Territory also can get a number identification. The business head or owner has to have their own identification number to apply. Three numbers are accepted by the IRS: a social security number (SSN), an employer identification number (EIN), or an individual taxpayer identification number (ITIN).

The person who has control over the business and its funds and assets files the application.

A sole proprietorship is the only typical business form that does not need an EIN for tax purposes. The owner can simply use their own number. If they hire an employee, then they do need one. Corporations and partnerships all do their taxes using an EIN. So do limited liability companies. Also, administrators of employee plans that employees of a business use to manage their retirement or health benefits use an EIN to file a Return of Organization Exempt from Income Tax. For an employee plan, an alpha character (e.g. a P) or a plan number (e.g. 003) can be added to the end of the nine digit identification number.

A corporation that files taxes as an S Corporation does not need an EIN.

Divisions are part of the business that has the single identification number. No additional number is given. Subsidiaries are a separate business when it comes to tax filing and get their own EIN.

Employment Taxes

Businesses with employees that make payroll deductions for federal tax use the EIN to tell the IRS the employer account to use for the employee's taxes and amounts taken out of pay for investments. Withheld income tax, social security and medicare are reported on the Employer's Quarterly Federal Tax Return. The Annual Return of Withheld Federal Income Tax is used to report deductions not on the payroll, including backup withholding, withholding for pensions, annuities, and IRAs.

A New Business

The number lasts with the business. A new one is not needed unless the business changes. A name change or a location change is not an end to the business the EIN identifies.

A new corporate charter and a statutory merger that creates a new corporation are both reasons to get a new EIN. A new subsidiary also needs its own number. Ending a partnership and forming a new one gives the partners a reason to get a new EIN.

Apply

The form used to apply is found on the IRS website www.irs.gov, and is called Application for Employer Identification Number. There is an interview style online EIN application. Make sure to use the full legal name on the form. A form can also be gotten by calling, e-mailing, faxing, or mailing.

A Title In A Number

Once an EIN is selected for a business, the number is put on all the documents and papers a tax filer uses to contact the IRS and keep their tax account up to date. The single number makes all the tax work simple.

Sources:

IRS, Understanding Your EIN: Employer Identification Number (2011).