Does my business require an EIN?
A California EIN Number is issued by the IRS that identifies your business for tax purposes. It is a unique number made up of nine digits and provided by the IRS. EIN means Employer Identification Number. Companies of all kinds are able to request an EIN. That said, the Internal Revenue Service demands that certain companies have one period you will need an EIN if you answer yes to any of the following:
- Does your company have employees?
- Is your company a corporation or a partnership?
- Does your company file excise, employment, or tobacco, alcohol, and firearms tax returns?
- Does your company withhold taxes on income provided to a nonresident alien?
- Do you have a Keogh plan?
- Is your company involved in a nonprofit organization, a trust, and a state, a real estate mortgage investment conduit, a planned administration, or a farmer’s cooperative?
Your business may be a single member LLC with no employees or a sole proprietorship, and in this case, an EIN is not necessary. However, it may still be beneficial. Having the number makes it easier to separate business and personal taxes period it may also be necessary to open a business bank account or secure business licenses. If you lack an EIN, you will have to use your Social Security number for tax documents.
It should be noted that individuals with a Social Security number, and individual tax identification number, or who already have an EIN may still apply for an EIN.
How Does My Business Apply for an EIN?
The IRS assigns EIN to businesses. The easiest way to apply for an EIN is to go to the IRS website and apply for an EIN. Before applying for an EIN, locate and have your social security or ITIN ready. The EIN application asks for the following questions:
- Company’s physical address
- Lawful name of the person responsible for tax matters
- Phone numbers and email addresses of the individual/responsible party
- Legal Name of the company as it is registered in the state of California
- Social Security number or ITIN
The application for a California EIN should be available online. The IRS will mail the EIN number to you. It takes about two weeks to get an EIN after you apply online.
If you have any questions about the process or would like a free consultation, please contact Nakase Wade. Our business lawyers are here to advise you.
Is it necessary to reapply for a new EIN?
In certain cases, your company may need to file for a new EIN. The Internal Revenue Service will not let you amend an existing EIN, preferring that you file for a new one. The Internal Revenue Service provides the most common reasons for requesting a new EIN:
- You used funds from an estate to create a trust.
- You changed your business structure, such as turning a sole proprietorship into a partnership or incorporating.
- You inherited or purchased an existing company.
- You are subject to a bankruptcy proceeding.
If your situation means that you have to reapply for an EIN, the application process remains the same as if you are applying for the first time.
How do I locate my EIN?
If you cannot remember your EIN, there are a couple ways to perform and EIN search.
The first way is to contact the IRS. Their office is open Monday through Friday from 7:00 AM to 7:00 PM. Their number is 1-800-829-4933.
If you recently changed your EIN and you do not have it on any older documents, this should be your first choice. Ensure that the individual who contacts the IRS is permitted to do so. Authorized individuals typically include a partner in a partnership, a corporate officer, or the sole proprietor themselves.
You should also check anywhere your EIN might be recorded. This number should be present on many important documents, including:
- CP 575 Notice: when the Internal Revenue Service provides an EIN, they send the business owner ACP 575 that confirms the number. This document may have been provided digitally when the applicant applied online, or may have been sent via mail or fax. Look to see if you got a printed letter or an electronic letter from the IRS at the time of application.
- Previous year tax returns: Locate your previous employment, income, or excise tax returns. In general, you will have to provide your EIN on tax returns, so it should be on official government documents.
- License or loan applications: It is possible that you used your EIN on applications for business licenses, permits, or loans.
- Financial institution or bank: If you used your EIN to open a bank account for your business, try visiting a local branch or calling the bank to secure the EIN you used to open the account.
It is not hard to do an employer identification number lookup. It is not necessary to hire a service to do this on your behalf.
How to find an EIN for a company?
Depending on the nature of your business, you may need to look up EINs of other companies. You may also wish to check another company’s EIN to validate their information.
If the company in question is registered with the Securities and Exchange Commission, and is publicly traded, you can utilize the SEC’s EDGAR system to search for an EIN. This service is for free. For nonprofit organizations, you can perform an EIN lookup on Guidestar.
If the business is not registered with the SEC, it can be harder to identify the EIN since there is no central database for such companies. You may use the following strategies:
- Get in touch with the company’s accountant or financing office to request the EIN, though they are not required to provide it.
- Look on the Secretary of State’s website for the company or look for other federal or local filings that may be available online.
- Use a paid database or hire a service to perform the EIN search.
How do you cancel an EIN?
If you submit an application for an EIN and then decide you do not require it or close your company, you can and this account with the IRS. The manner in which you close your account will depend on whether you have filed tax returns with the EIN or not. If the EIN has never been used, send a letter to the Internal Revenue Service that includes the full legal name of the company, the EIN, the business address, as well as the reason the account should be closed. It would be a good idea to send the letter certified return receipt so that you will have confirmation the IRS got it.
If you have used the EIN to file an income tax return, it may be necessary to file a final return prior to the IRS closing the account. Business tax returns, including Form 1120-S, Form 1065, and Form 1120, have a checkbox to mark the return as final. Even if you do not have any expenses or revenues during the final year in business, it is necessary to file a final return.
After the IRS provides an EIN, it can never be assigned to another entity. This is true even after you close your business account. The number remains the permanent identification number for the company, and if you reopen the business later, you can reopen your account and reuse the number.
What type of business needs an EIN?
All business entities such as LLC (limited liability company), partnerships, corporation, and incorporation need an EIN. Additionally, all businesses that pay employees need an EIN. Generally, a business that operates as a sole proprietorship does not require an EIN. An EIN’s purpose is to identify your business and the tax account as an employer. Your business will need an EIN to file state and federal taxes. You should apply for an EIN early enough to have your number when you need to open a bank account or pay employees. The IRS assigns an EIN to a business. The IRS does not charge to get an EIN number.
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