A guide to Employer Identification Numbers
In the United States, each business is issued with a unique 9-digit Employer Identification Number, also often known as an EIN or a Federal Tax ID Number. An EIN is supplied to each business by the Internal Revenue Service (IRS) and is required for the following purposes:
- File company taxes
- Pay federal taxes online
- Issue tax documents to suppliers
How to locate your EIN
Businesses that have already been issued with an EIN should be able to locate the number on the bottom of their tax returns.
If you are unsure if your business has been issued an EIN, then you should call the IRS business and speciality tax line.
All types of businesses are required to obtain an EIN regardless of company size, such as:
- Sole traders
Do I need an EIN?
Whilst all businesses within the US are required to have an EIN, there are instances where companies based outside of the US still may need to obtain one.
Non-US citizens with companies located outside of the US will need to apply for an EIN if they are selling products and doing business in the US, such as e-commerce stores.
How to apply for an EIN in the US
To apply for an EIN in the United States, businesses must be registered and located in the US and the person making the application must have a taxpayer identification number such as a social security number. The IRS advises for EIN applications within the US to be made online as this is usually the quickest process.
How to apply for an EIN outside the US
Businesses outside of the US can telephone the IRS on 267-941-1099. Operation hours are 6 am – 11 pm Eastern time, and you will be charged for making the call. Applying for an EIN via phone can sometimes be a lengthy process, so ensure that you set aside a reasonable amount of time.
During the call, you will be asked various questions outlined in the Form SS-4, which you should review and download on the IRS website to ensure you are fully prepared.
The Form SS-4 includes questions concerning why your business is applying for an EIN, the type of company you work for and the industry sector. These are the types of questions you will be asked over the phone, and once all questions have been answered sufficiently, you will be issued with an EIN at the end of the call.
If you wish to authorise a third-party designee to act on behalf of the business and receive the EIN, you must complete the relevant section on the Form SS-4 before making the call.
Confirmation of the EIN is usually posted to businesses with a US mailing address, but overseas applicants can request a copy via email.
You will never need to pay to apply for an EIN through the IRS, so always avoid any offers stating that a fee will be required.
EINs are unique to each business, so even if your business ceases trading, your number will not be passed on to another business. However, the IRS can close your company account if it’s no longer needed by sending them a cancellation letter with your business name, EIN and reason for the account closure.
Sending international tax returns
Once you have been supplied with your EIN, businesses that conduct business in the US from another country can begin filing their tax returns. The easiest way to do this is online, though it could be worth seeking advice from an international tax expert beforehand to ensure that tax is calculated correctly.
Halo Financial can help your business send international money transfers quickly and cost-effectively through our range of currency products. To find out more about our foreign exchange solutions, please give us a call on 020 7350 5474.