A lot of business owners think the first thing they need to do to start their business is to get a Federal Employer ID Number, also known as an Employer ID Number (EIN). While it won’t hurt if you do, you may not necessarily need one.
The EIN number essentially gives the IRS a way to link your business income to you as a person. Using an EIN allows you to fill out tax forms like 1099s and W-9s without handing over your social security number to everyone who requests it. I know the name is a little misleading but remember; you don’t have to be an employer to have one.
You won’t need an EIN number if you’re a sole proprietor and don’t mind giving out your social security number when it’s requested for 1099 forms. You’ll be asked for your social security number for the 1099 form if you provided services and received $600 or more from another business owner.
If you have any other business structure or you are planning to hire employees or contractors, you can set up an EIN right now for FREE in about 10 minutes or less. Make sure you only use IRS.gov. There are many scammy sites out there that will charge you to set this up! But if you are on an authentic government website it should be free, only takes a few minutes, and you will instantly receive your EIN. This number can now be used in place of your social security number when dealing with all business tax forms.
To apply for an Employer Identification Number (EIN):
- Your business must be located in the United States or U.S. Territories.
- You must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- You must complete the application in one session, so have your full name, address, SSN or ITIN, and business structure readily available.