Applying for an employee identification number (EIN) takes a little time, but it’s a great way to start establishing a separation between your business and personal finances. Here’s a step-by-step guide to applying for an EIN for your small business.
Dear Your Business Credit,I’d like to open a business bank account, and my banker said I need an employer identification number (EIN). Can you tell me how to get one? – Jackie
Applying for an EIN takes a little time, but you’ll be glad you have one. It’s a great way to start establishing a separation between your business and personal finances.
An EIN is used to identify tax returns filed with the IRS. Business owners typically need an EIN if they:
- Pay wages
- Have a self-employed retirement plan
- Run a partnership or corporation
- Are required to file these types of tax returns: employment, excise, fiduciary or alcohol, tobacco and firearms
How to get an EIN
To get an EIN, you will need to supply the Social Security number of the principal officer, general partner, grantor, owner or trustor of the business – or their individual taxpayer identification number (ITIN) or existing EIN.
This person, whom the IRS calls the “responsible party,” controls, manages or directs the company that is applying and how its funds and assets are handled.
In case you are unfamiliar with ITINs, these are processing numbers issued by the IRS, regardless of immigration status. Resident and nonresident aliens often use an ITIN when they have U.S. filing or reporting requirements.
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You can apply for an EIN at the IRS’s website. The application must be completed in one 15-minute session, so make sure you review the requirements and have the information you need handy.
For instance, you will need the exact legal name of your business and need to know what type of entity it is (sole proprietorship, partnership, corporation, etc.).
Once you complete the form, you will get your EIN, provided you meet the requirements.
Apply via fax, mail or telephone
It is also possible to apply for an EIN by fax or mail, or in the case of international applicants, by telephone at (267) 941-1099. If you wish to apply by fax or mail, you must complete Form SS-4.
Once you have your EIN, treat it with as much care as you would your Social Security number. There is such a thing as business identity theft, so if you must send your EIN by email on a W-9 form or other paperwork, use some form of encryption. ProtonMail is a free, easy-to-use email service that you can use to encrypt.
Armed with your EIN, you’ll be in a better position to apply for business credit. Lenders like to see that you are taking steps to formalize your business.
I suspect you’ll feel like your business is more “official,” too, and feel better knowing you’ve established more separation between your own money and the business’s funds as you move forward with opening the bank account.