An Employer Identification Number (EIN), also known as a Federal Tax Identification Number is used to identify a business entity. An EIN is required for all C corporations and S corporations and under a number of other instances.
An EIN is required for all C corporations, S corporations, general partnerships and limited partnerships.
Source: If you answered yes to any of the questions listed in the previous chart, then an EIN is needed.
The application process for an EIN is the same regardless of the business structure you may have. The IRS does not charge a fee for an EIN application. If the application process is conducted online, an EIN is provided immediately after the application is completed. It is extremely important that this information is safely archived and easily referenced.
Applying by mail:
Mail completed Application for Employer Identification Number (Form SS-4) to
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Applying by fax:
Fax completed Application for Employer Identification Number (Form SS-4) to (859) 669-5760
Applying online:
IRS Page: Apply for an Employer Identification Number (EIN) Online
Resources and Links:
- https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-EINs
- https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN
- https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
- https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Online-EIN-Frequently-Asked-Questions
- https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Lost-or-Misplaced-Your-EIN
A sole proprietor must have an EIN in order to:
- Hire employees;
- Have a Keogh or Solo 401(k) retirement plan;
- Buy or inherit an existing business that you operate as a sole proprietorship;
- Incorporate or form a partnership or limited liability company; or
- File for bankruptcy.
A family child care provider operating as a sole proprietor in New York State who does not have employees, generally, would not require an EIN. Tax Bulletin ST-175 indicates that home-based child care businesses do not make taxable sales. However, an EIN is required if there is an excess payment of taxes.
Nonetheless, there are benefits to an EIN even if it is not required. For example:
- An EIN may be required to set a bank account for a business;
- An EIN also serves as an alternative to a Social Security Number;
- Generally, it is required that a provider presents an EIN or Social Security Number to clients.
- Any person claiming a credit for child care expenses will need this information; and
- Having an EIN can protect a provider against identity theft.
Read here about taxes and record keeping
Resources and links: