Searching the Internet for information on how to apply for an employer ID number (EIN) can give you a long list of search results. But beware, because those searches can bring you to sites that look like IRS SS-4 form, which is the application form for the Employer ID number.
The Latest Scam - Fake EIN Application Sites
The other forms you see on the search form are for companies who will charge you up to $129 to complete and send this form to the IRS. I tried one of these sites just to see what would happen, and I was led along to fill out the form. At the end was I asked for money, and only then did the site tell me that it was not affiliated with the IRS nor was it part of any government agency.
The only form you need is the IRS online application, Form SS-4, for the employer ID.
You don't need to pay to send Form SS-4 to the IRS. The application is free and it can be filed online or by phone and you can get your EIN immediately.
Another Scam - Stolen Employer ID Numbers
Employer ID numbers are just like Social Security Numbers and they are used to identify a business for tax and financial purposes. Identity thieves can steal your business EIN, so it's important to keep it safe.
The IRS says that business identity theft can come in two varieties: tax-related and non-tax related. An identity thief can use your EIN to:
- File false tax returns and get refunds,
- Hack into your bank account and withdraw funds
- Use your credit cards and run up bills, or
- Take out credit and ruin your business credit rating.
This article from The Balance on Protecting Your Business Identity can help you get started with securing your EIN and other business data.
How to Apply for an Employer ID number
Most businesses need a business identification/tax identification form called an Employer ID. This form is required for businesses with employees and often for businesses that want to open a business bank account. Read more about when you need an Employer ID number.
If you determine that you need a federal Employer ID number, next decide how you want to apply. You can apply online or by phone and receive your EIN immediately. You may also apply by mail or fax.
The simplest method is to apply online. Go to the IRS website and search for EIN Assistant. You will be led through the process of completing the SS-4 application form online.
Before You Apply for an EIN
Before you attempt the online application, download and print out a PDF copy of the SS-4 form. Go through the form and enter all the information. Also, read through my article on how to complete Form SS-4 to apply for an Employer ID number. Get all the questions answered before you go to the EIN Assistant, since the login will time out if you wait too long to complete the form, and you will have to start over.
Filing an EIN Application for an LLC
The only tricky part of the SS-4 form is the question about your business type, and that's only tricky if your business is an LLC. The IRS doesn't recognize an LLC as a taxing entity (long story), so you will have to enter the information that your business is an LLC in a different way.
- If you are a single-member (one-person) LLC, go to box "Other" and insert "disregarded entity-sole proprietorship”
- If your LLC has more than one member, click the box for "partnership"
- If your LLC has elected to be taxed as a corporation, S corporation, or Professional Services Corporation, click the corresponding box.
If you aren't sure what taxing entity to use, consult a tax professional or tax attorney. This is an important decision, and it can affect your business taxes, so it's vital to get it right.
Who is the Responsible Party?
The other question I often get is about the "responsible party" designation. The "responsible party" is a person who is an employee of the business who is designated to send and receive legal notices. It is not an attorney or another individual who is not part of the business.
Getting help with Form SS-4
Applying for a simple Employer ID number for a sole proprietorship (solo business owner) doesn't require help. If your business is complex, like a corporation or partnership, you may want to get help from your attorney, but in the case of a corporation, you should already have an attorney helping you set up your corporation.
Yes, an attorney will charge you for completing the SS-4 form, but you can ask about completing the form yourself to save money on attorney fees.