An Employer Identification Number identifies a business to the IRS. It is free to obtain and it is required in more situations than people expect.
When you need one
- You have employees.
- Your business is a partnership or a corporation.
- You file certain excise or employment tax returns.
- You have a retirement plan for the business.
- A bank requires one to open a business account.
- A client requires one on a W-9 rather than your Social Security number.
Why get one even if not required
A sole proprietor with no employees can often use their Social Security number. Many still get an EIN, because it means handing an EIN to every client on a W-9 instead of a Social Security number.
That is a meaningful privacy and identity-protection difference for a contractor working for several companies.
How to get one
Applications are made directly with the IRS and there is no fee. Be careful of third-party sites that charge for something the IRS provides free.
If a website is charging you a fee to obtain an EIN, you are paying for a free government service. We can guide you through it as part of setting the business up properly.
Keep it safe
Store the confirmation letter permanently. Banks, lenders, licensing bodies and clients will ask for it, and replacing it is more work than filing it.
Setting up a business?
Call (432) 257-7547 or come by 700 C Andrews Hwy in Midland. We work in English and Spanish.
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