A tax Identification number is a nine-digit number that is given by the IRS for legal entities and businesses with a goal of filing and making reports on federal tax.
This EIN is used by most business types including LLC, partnerships, and corporations even without the presence of employees for tax identification purposes. The following are the steps on apply for tax id.
The easiest way to obtain an EIN is through an online EIN application.
Visit the IRS Website
To make your EIN application, visit the EIN application web page and scroll to the bottom of the page. Select the ‘Begin Application’ button.
Choose Your Entity Type
It is the most significant step of applying for an EIN because every entity has distinct regulations and rules. Various entities are ranging from sole proprietorship, partnership, corporation to Limited Liability Company (LLC).
For instance, if your business is a Limited Liability Company, click on the ‘Limited liability Company’ button and fill all the forms including llc forms. After completing your application, you will later receive your Tax ID through email.
Some terms used in the IRS website by may be complicated, on that note, the site provides the definition s of these terms to make your application process simple and straightforward. If a phrase appears blue or underlined, you click on it to get a definition. This clicking process will not affect your online EIN application.
Provide Information on Your Members
If your business is an LLC, you will be required to provide the number of all your members or owners and the location of your business. If there is only one member in your LLC, you will be considered a single member LLC, and you will be required to make reports of your LLC income and deductions using your 1040 tax returns.
In case you have various members on your LLC, you will be directed to a page that states that you are a multi-Member LLC. On that note, your company will be categorized as a partnership for the for IRS tax reasons.
What Are Your Reasons For Requesting An EIN?
- You can request for an EIN if you are :
- Planning to start a business
- Banking purposes
- You just bought an active business
- Hiring employees
Identify a responsible party
You will be required by the IRS to offer a contact person (responsible party) that will be responsible for all tax issues. If your LLC is taxed under a sole proprietorship, an individual will act as the contact. However, it is entirely different for an LLC corporation; the company will be required to find a corporate officer who will be liable for any questions from IRS.
The IRS will need some information from the principal officer (for corporations) and a primary member for (LLCs) which is consists of the tax identification number and social security number.
Provide the Location of Your Business
Regardless of your entity, you will have to provide a physical address for your business. In addition to that, a phone number will also be significant in successfully making an application for an EIN.
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