FAQ

What is an EIN?

In the United States, an Employer Identification Number (or EIN) is the corporate version of a social security number. Also known as an FEIN or Federal Employer Identification Number (and sometimes known as a TIN when used for identification). EIN’s are issued to anyone (individuals included) who have to pay employment taxes.

The EIN is a nine digit number assigned by the IRS and used by business entities, government agencies, trusts and estates, partnerships, non-profit organizations, and sole proprietors. The IRS uses the EIN to record those taxpayers who need to file a number of different tax returns for their businesses. Those individuals who are classed as employers can opt to either use their social security number or obtain an EIN when it comes to reporting taxes withheld for their employees.

Employer Identification Numbers were created by the IRS in 1974 in order to create an identification system for entities required to pay taxes. The relevant provision was first adopted as part of the Tax Code Revision in 1954 and then broadened in 1961. It was agreed that the EIN would take the form 00-0000000 whilst Social Security Numbers are written as form 000-00-0000. Thus it is easy to differentiate between the two. Similarly, there are now EIN decoders on the internet that can detect which state a company has been registered in, simply by typing in the EIN.

Businesses need Employer Identification Numbers to pay their employees and to be able to file business tax returns. It is essential to obtain an Employer Identification Number if the business is to be considered an LLC, Partnership, Corporation or S Corporation or a Non-Profit. Any business that does not obtain an Employer Identification Number will be classed as a proprietorship and the Operator or Owner's Social Security Number will be used on any relevant tax documents.

You may also ask, do I need an EIN to file Form 2290 and get my schedule 1?  Yes, you do, no longer can you file with your social security number if you are a Sole Proprietor.  Applying for an EIN is easy and can also be done online with the IRS, click here to apply for an EIN. Once you have your EIN, you'll need to wait two weeks before you can use it to E-file any returns. When you're ready and you need to file your 2290, remember Freewaytax.com.


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