What is a Federal Identification Number - Applying for an EIN

You need an EIN if you: *  Started a new business Hired or will hire employees, including household employees Open a bank account  Changed the legal character or ownership of your organization Purchased an ongoing business Created a trust Created a pension plan as a plan administrator Are a foreign person and need an EIN to comply with IRS withholding regulations Are a withholding agent for taxes on non-wage income paid to an alien  Are a state or local agency Are a federal government unit or agency Formed a corporation or a limited liability company (LLC) Formed a partnership Administer an estate formed as a result of a person's death Represent an estate that operates a business after the owner's death.*  Limited Liability Companies You will be required to obtain a new EIN if the following statement is true: A corporation files papers with the state to convert to an LLC and will use the default classification of partnership. (The corporation is treated as if it has liquidated in this case.) You will not be required to obtain a new EIN if the following statements are true: A corporation files papers with the state to convert to an LLC and will elect via Form 8832 to be taxed as a corporation. The number of members in the LLC changes from more than one member to a single member. The number of members in the LLC changes from a single member to more than one member. A sole proprietor files papers to become a state recognized entity, organizes as an LLC, and will file Form 8832 or Form 2553 to elect to be treated as a disregarded entity or taxed as a corporation or small business corporation. What is a Corporation... A corporation is a person or group of people who establish a legal entity by filing articles of incorporation with the state's secretary of state granting it certain legal powers, rights, privileges, and liabilities. What it is not... A corporation is not a sole proprietor or partnership. Limited Liability Company (LLC) A limited liability company (LLC) is a structure allowed by state statute. An LLC is formed by filing articles of organization with the individual state's secretary of state. Owners of an LLC are called members. Members may include individuals, corporations, other LLCs, and foreign entities. An LLC can be formed by one or more members, and there is no maximum number of members. There can be no more than one active LLC with the same name in the same state. For federal tax purposes, an LLC may be treated as a partnership or a corporation, or be disregarded as an entity separate from its owner. An LLC can also be organized as a professional limited liability company (PLLC) or a limited company (LC).

The EIN is issued by the IRS. It is necessary to have an EIN both to open a bank account, pay your corporate taxes and run your business.

We can either obtain an EIN on your behalf or you can contact the IRS directly. Our experience proves that when you retain us to form your corporation you should request that we process the application for you as well. 

This EIN is your permanent number and can be used immediately for most of your business needs, including opening a bank account, applying for business licenses, and filing a tax return by mail. However, no matter how you apply (phone, fax, mail, or online), it will take up to two weeks before your EIN becomes part of the IRS' permanent records. You must wait until this occurs before you can file an electronic return, make an electronic payment, or pass an IRS Taxpayer Identification Number matching program.

In order to obtain an EIN you must have a SSN or an EIN previously issued to a corporation or LLC already in business. If you are an international client filing a new company in the state of Delaware please contact us about the new rules recently put into effect by the IRS regarding the EIN, viz:

Please note that the IRS has new rules pertaining to Nominee Services and the application for the EIN. This is what they state on their website

The Internal Revenue Service has become aware that nominee individuals are being listed as principal officers, general partners, grantors, owners, and trustors in the Employer Identification Number (EIN) application process. A nominee is not one of these people. Rather, nominees are temporarily authorized to act on behalf of entities during the formation process. The use of nominees in the EIN application process prevents the IRS from gathering appropriate information on entity ownership, and has been found to facilitate tax non-compliance by entities and their owners.

The IRS does not authorize the use of nominees to obtain EINs. All EIN applications (mail, fax, phone, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,” controls, manages, or directs the applicant entity and the disposition of its funds and assets.

To properly submit a Form SS-4, the form and authorization should include the name, Taxpayer Identification Number and signature of the responsible party. Third party designees filing online applications are reminded of their obligation to retain a complete signed copy of the paper Form SS-4 and signed authorization statement for each entity application filed with the IRS. Nominees do not have the authority to authorize third party designees to file Forms SS-4, and should not be listed on the Form SS-4.

If a nominee is used in the state formation process and the true responsible party has not yet been identified, the entity must identify that individual before applying for an EIN.

We have addressed this issue and will help you obtain the number in a legal manner so that you can file your annual tax return.