Opening a business in the United States requires many steps.
Among one of them is obtaining an EIN, through which a business owner can legally operate in the US and do many other things like open a bank account for his company.
In this article we will explain more about the importance of getting an Employer Identification Number.
What is an Employer Identification Number (EIN)?
The Employer Identification Number is a nine-digit number that is very important for a company in the United States.
Because the Employer Identification Number is what differentiates one company from another in the United States.
With this number, a company is identified before the Internal Revenue Service (IRS) in the USA.
Through it, the owner of a company can:
- Declaring taxes
- Open a business account for your company
- Applying for a business loan
- Obtain a business license
It is very important that an owner knows his company’s Employer Identification Number.
Memorize it, or keep it in an easily accessible place.
There are other registration numbers for tax processing and other things, for example: TAX ID, ITIN, and SSN.
The importance of an Employer Identification Number (EIN) for a company
As we explained earlier, by this ID number, a business owner can do many things in his company.
For example, it is very important in certain business transactions, such as filing business taxes and obtaining small business loans.
If you don’t have an Employer Identification Number, your company can be prevented from getting essential funds for your business, for example.
If your company is a partnership or LLC with multiple owners, it will also need to have this identification number.
Even if your company has no employees, it is advisable to get an EIN, because doing this early in the process allows your company to be prepared for the future.
A company having this identification number conveys trust and credibility, especially for future partnerships and business deals with other companies.
How to get an EIN?
To get one, you need to apply through the Internal Revenue Service (IRS) website.
The procedure is easy and free.
Be aware of the business hours for this application, between 7 am and 10 pm Eastern Standard Time.
When you open the IRS website, you select the option “How to apply for an EIN”.
You can do this process via online, by fax, or by mail.
In the online process, you click on the option “EIN from the internet” at the very first tab, where you will see the steps of the process.
YOU WILL DETERMINE YOUR ELIGIBILITY
The process requires that your company is located in the United States or territories, that the registrar has a valid taxpayer number (SSN, ITIN, EIN)
UNDERSTANDING THE ONLINE APPLICATION
Here you will fill out the form provided.
APPLICATION SUBMISSION
After performing all steps of the process, you will receive it immediately.
We recommend downloading and saving the pdf and if possible printing it.
How to find another company’s EIN?
As we said before, having this identification number transmits confidence and credibility to a company, thus enabling future business with other owners.
To know the identification number of another company, some procedures are necessary, such as
ASK THE COMPANY
The accounting department must have the identification number of this company, or the finance department that is responsible for payroll.
SEARCH SEC ARCHIVES
If the company is publicly traded, you can check the identification number on the Securities and Exchange Commission’s website by typing the company’s name in the search bar.
GET A TRADE CREDIT REPORT FROM THE COMPANY
Some credit bureaus allow you to view another company’s credit report, but such a service is fee-based, and the price varies from bureau to bureau.
Conclusion
If you want to start business in the United States, you must have an (EIN).
Be aware of the processes when it is necessary to change or cancel this identification number, changes of address or company name do not usually require a new one.
If you are self-employed and are the official sole owner of your business, you don’t need one to operate legally, but having one has certain advantages for a business owner.
Make sure you know your company’s EIN, and where to find it, whether it’s in your IRS confirmation letter, old tax returns, business credit report, and more.
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