The Employer Identification Numbers (“EIN”) for businesses, also known as Federal Employer Identification Numbers, are used to identify a particular business on reports to the U.S. government for payroll withholding taxes and federal tax returns, as well as to the state, to financial institutions and to vendors.
Sole proprietorship businesses often use the owner’s social security number as the Employer Identification Numbers (“EIN”). However, a sole proprietor business may choose the alternative of applying for a Federal EIN. All other business types need an EIN other than the owner’s personal social security number.
To apply for an EIN, download the SS-4 application from the IRS, fill it out and fax it back to the IRS.
Financial institutions, other governmental agencies, and some vendors and suppliers will ask for a business EIN when you open an account. Requesting an EIN will not necessarily trigger an IRS audit or place scrutiny on a business. Once you are issued an EIN, the IRS will send materials for remitting both federal payroll withholding taxes and business income taxes.