Every company that has employees is required to have an Employer Identification Number (EIN), but if you do not have employees in your company then you will need a Social Security Number (SSN) of your business.
What is an EIN?
A number assigned by the Internal Revenue Service to identify a business for tax purposes is known as an EIN. You should include the tax ID of your business on bank account applications, income tax forms, and employment tax reports and payments.
- How is EIN different from a Social Security Number?
EIN is referred to as a taxpayer ID for a business, whereas a Social Security Number is a taxpayer ID for an individual. Another type of taxpayer ID is referred to as the "Individual Taxpayer ID." This is used by individuals who do not have a Social Security Number.
- Do you need EIN for your business?
You will require an EIN for your business if you have employees or if you file certain kinds of taxes. You will require it if your business is taxed as a corporation or a partnership.
You might also require it at the time you start your business and apply for a business checking account and a business license.
- When do you need a new EIN?
A new EIN is not required if you simply change the name or address of your business.
You do not require a new EIN if you make simple changes to your business, but if you change your legal business structure from a corporation to some other entity or from a sole proprietorship to a corporation, you may need a new EIN.
You should inform the IRS if you make any changes and the IRS will inform you if you need a new EIN.
You must send a change request letter to the appropriate IRS address in case you made any mistake on your EIN application or if you submitted the wrong person as the responsible party in Item 3 on the form.
- Are EINs recycled?
Your EIN is your Taxpayer ID. It cannot eventually end up with another business if your business ceases to operate. It will not expire. When you are finished with it, it will go forever.