When it comes to tax time in April, there are plenty of things you will need to do to get ready to not only file your taxes but to gather all of your important documentation such as the 1040s, 1099s, W-2s, and any other forms you will need to make sure your taxes are properly submitted.
However, in addition to making sure you have all of your needed tax documents, you will also need to know your EIN look-up as well.
Unsure of what exactly an EIN is and why you need it?
Check out the following on everything you need to know about EIN and how to look it up.
What Does EIN Mean?
EIN is an abbreviation for an employee identification number. This is a unique number that the IRS designates to a business or company specifically for tax purposes. This number essentially acts similar to s social security number for a business, which means the business assigned to this number must not forget it. Once you are assigned an EIN, you will need to make sure you keep it on hand or in a safety box, just like you would for a social security card.
Now that you know what an EIN is, let’s explore how to determine if you need one of your business.
How Do I Know If I Need an EIN?
As stated earlier, an EIN is a unique number that the IRS assigns to taxpayers that are required to file the different types of business tax returns that are required to file. Although it seems like every tax-paying business is required to have an EIN, that is not always the case. For example, sole proprietors and single-member LLCs are not assigned an EIN and instead are required to only use their social security number.
However, if you are still unsure as to whether your business needs an EIN or not, you can always go through the following criteria to assess whether or not your business needs one:
Employees – if you have hired employees for your business, you will need an EIN
Type of business – if your business is considered a partnership, corporation, or non-profit, it qualifies for an EIN
Types of tax returns: Alcohol, Tobacco, and Firearms, Employment, and Excise requires an EIN
Withholding taxes – if your business withholds taxes on income, other than on wages, and is paid to a non-resident alien, you will need an EIN
Keough plan – if your business has a Keogh plan, which is a tax-deferred pension plan for self-employed or unincorporated businesses for retirement purposes, you will also need an EIN
Now that you have a guide to use to decide whether you qualify for an EIN, let’s explore the benefits of having an EIN for your business.
Benefits of Having an EIN
After you have considered the above guide to determine whether or not you need an EIN for your business, it is always highly encouraged that you apply for one for your business anyway. Even if you don’t meet the requirements for an EIN, you can always apply for an EIN. Submitting your application with the IRS now rather than later on can save you time and the hassle of having to change your account number later.
Having an EIN can also greatly benefit your business for the following reasons:
Lenders prefer to see EINs rather than social security numbers on loan applications, which can greatly increase your chances of getting approved
EINs allows you to build a better credit score for your business
EINs can maintain personal liability protection for Small Limited Liability Companies (SMLLC), which can be extremely helpful in court when deciding the fate of LLC owners and whether they treated a business as a sole proprietorship instead of a separate business entity
Regardless of whether your business qualifies for an EIN now, or later, it’s always a good idea to go ahead and submit a form now to obtain one for future use.
How to Look Up an EIN
Now that you have all the information you need to determine whether you need an EIN now or later, the following will help you when you need to look up your EIN:
For employees – check your W2 given to you by your employer. The EIN will be located in box b. If you can not locate it on your W2, contact your employer.
For employers – if you have lost or misplaced your EIN, contact the IRS and they will send you your EIN information.
If you need to apply for an EIN, you can always do so either through the mail, fax, or phone with the IRS.
Knowing Your EIN
Know that you know what an EIN is and why you need it, next time you need to look one up for your business, be sure to follow our helpful guide. You can always request an EIN at any time, whether you need one now or later. And, the most important thing to remember about EIN look-ups is that you can always contact the IRS if you need to access it again.