Employer Identification Number (EIN)
An Employer Identification Number (EIN) is also known as Federal Tax Identification Number. It’s a nine-digit number used to identify individual business entities. All businesses must register for an EIN and can do so (at no cost) online, via the IRS.
All EIN applications must include the name as well as their taxpayer identification number of the actual principal officer, general partner, grantor, trustor, or owner.
An EIN is necessary if:
- You have employees
- You operate your business as a corporation or partnership
- You file tax returns for employment, excise, or alcohol, tobacco or firearms
Or if your business is involved with trusts, estates, real estate mortgages and investment conduits, non-profit organizations, plan administrators, or farmers’ cooperatives.
You may also need an EIN to:
- Open a bank account in the name of your business
- Apply for a credit card for your company
- Apply for business permits
- Apply for a business license
- Apply for a business loan
- Furnish independent contractors with a form 1099.
You may also wish to apply for an EIN if you’re an independent contractor working with lots of individual clients. Namely, because handing out your Social Security Number can make you an easier target for identity theft.