Start a Michigan Business Series: Employee Identification Number
Often mistakenly called an Employee Identification Number, an EIN, or Employer Identification Number is also known as a your Federal Tax Identification Number according to this tax payment tips. Similar to a social security number, an EIN is used to identify a business entity.
Do I Need an EIN?
If you have employees or operate a partnership or corporation you’ll need an Employer Identification Number. If you answer yes to any of the other questions you’ll need one as well:
- File employment, excise, or alcohol, tobacco and firearm taxes?
- Withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have Keogh plan?
- Are you involved with the following types of organizations: Trusts, IRAS, Estates, Non-Profits, Farmers Co-ops, Plan administrator?
Getting an EIN is a free service and you can apply online.
Your EIN will be a nine digit number assigned by the IRS. It’s important to keep this number safe.
If you recently started a business that falls under the above listed categories, this is an important step to launching your business. Be sure to follow all the steps listed on the IRS website to ensure timely processing.
Employer Identification Exempt Organizations
A tax exempt organization is non-profit org that is exempt from certain taxes as described under Section 501 of the IRS code. If you think your exempt you’ll need to apply to the IRS for a determination letter that would grant you formal tax exemption, also known as 501(c)(3) status.
Avoiding Common EIN Problems
- If you file as an S Corporation be sure to file Form 2553, Election by a Small Business Corporation
- An association, LLC, or other org that elects to be taxed as a corporation must file Form 8832, Entity Classification Election
- Remember to always include your SSN, EIN, or ITN on Line 7b or Form SS-4
- Always use the full legal name you entered on Form SS-4, line 1 and the EIN given to you, consistently on all business tax returns
- If you change your address after receiving your EIN, you must use Form 8822 to notify the IRS of the new address