Welcome Guest | Login or Register

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

Getting a Federal EIN for Your Start-Up Business…
One Little Form, So Many Questions.

 - by Todd Jensen

(c) Todd Jensen - All Rights Reserved
 http://www.newein.com

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

One of the first questions start up businesses have is…

“How do I get an EIN?”

Before we look at the how to get this magic number, you
need to make sure you really need one.

If you have a sole proprietorship, with no employees,
you do not need an EIN. The Federal Employer
Identification Number, or EIN, is an IRS reference
number for your business.  As a sole proprietorship,
your Social Security Number is the only number you
need.  You do not need an EIN until you hire your first
employee.

Remember, your states and cities have their own
requirements for business licenses, so you need to
check with your state and city agencies to determine
whether you need a business license in your area.  The
requirements in each state vary widely, from paying a
small fee, to requiring testing, insurance and bonding,
depending on the type of your business, entity, or your
level of activity.

If you have a partnership, corporation, LLC, or plan on
hiring employees, you need to apply for a Federal EIN.
For business entities other than sole proprietorships,
your Federal EIN acts like a Social Security number for
your business entity.  Banks require a Federal EIN to
open a bank account, and your vendors may require you
to give them this number for Form 1099 reference
purposes.

Your business entity only needs one EIN.  Your company
may operate multiple business entities under different
dba (doing business as) names, but each legal entity
should only apply for an EIN one time.  Even if you
change the type of tax return you file, if you have an
LLC, you should still use your original EIN.  The only
time you should apply for a new number is when your
business changes ownership, either through
incorporating a sole proprietorship or changing from a
sole proprietorship to a partnership.

The Federal EIN is also used for trusts, pension plans,
state or local tax agencies, withholding agents,
associations, etc.  This causes confusion, as the
application form to get an EIN is designed to cover all
of these different situations.  Do not be surprised if
there are questions or references on the form that do
not apply to your business.

Acquiring an EIN is actually a much easier process now
than it was just a few short years ago.  The IRS has an
online application available, allowing you to get your
own Employer Identification Number 24 hours a day,
seven days a week.

You can also apply for an EIN by mail, fax, or
telephone (1-800-829-4933).  Whichever format you use,
the process uses one form, the SS-4.

You can get a copy of the Form SS-4 on the Internal
Revenue Service website, www.irs.gov.  Detailed
instructions are also available on the IRS website.

If you have employees, and have paid wages, or will
soon, you need to make getting an EIN a number one
priority.  The penalties for depositing payroll taxes
are substantial, and you should do your best to avoid
these at all costs.  They range from 2% of the tax due
if the deposit is just one day late, up to 10%, if you
are 16 or more days late.  You can also be subject to
even more late penalties if the taxes are not paid by
the due date of the return.

Obviously, the IRS considers timely depositing payroll
taxes extremely important, but actually getting the
money to the IRS can be a complicated process if you do
not have your EIN.

You can deposits payroll taxes two ways, electronically
through the EFTPS system, or by check through your
local bank.  You must either have your electronic
account set up, or have a deposit coupon to make a
payment at your bank.

Since January, 2004, the IRS has automatically enrolled
businesses who apply for an EIN in their EFTPS program.
You will receive your enrollment information and PIN
number by mail.  You have to complete the process by
providing company bank account information to the IRS
in order to make deposits. 

If you ask the IRS to verify your bank account
information, be aware that the enrollment process can
be delayed by up to six days.  Keep this in mind if you
are getting close to the due date for your tax
deposits.

The IRS no longer automatically supplies Form 8109
yellow coupon books to new EIN applicants.  Coupons are
required for your bank to process your payroll tax
deposits.  If you want to pay by check and coupon, you
need to call the IRS at 1-800-829-4933 to request a
coupon book.  It can take 5 to 6 weeks to receive your
deposit coupons.  They will send you one coupon with
your acceptance letter within two weeks of applying for
your EIN.

Companies with large payroll tax deposits are required
to use the EFTPS system, but I recommend you order a
coupon book as a backup, if you are not required to
deposit electronically.  Why?  Well, EFTPS deposits
must be initiated the day before the taxes are due,
while bank deposits can be timely made on the due date.
You can save yourself a tax penalty by depositing your
taxes directly at the bank if you happen to forget to
initiate the transfer the day before.

If you are in a real bind, and have access to a local
IRS office, you can go in and get a Form 8109-B.  This
is a blank deposit coupon, and allows you to fill in
your EIN and business information on the blank form.
You can use this to make a deposit at your bank if you
are still waiting for your printed coupon book.

Be aware that the IRS really does not like you to use
these blank forms, so they tend to only give you one or
two forms at a time.  Order your coupon book or
finalize your EFTPS enrollment as soon as possible, to
avoid frustration.  They do want your money-they just
want you to pay the right way!

Don’t waste your company resources on payroll tax
deposit penalties.  Get your EIN now!

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Discover The Easy 3-Step Process to Getting Your Federal
Employer Identification Number FAST, plus How to Keep
Your Private Information Private…
FREE Details:==> http://www.newein.com
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

<———- End Article ———->

** Attn Ezine editors / Site Owners **
Feel free to reprint this article in its entirety in
your ezine, blog, autoresponder, or on your site so
long as you leave all links in place, do not modify
the content and include our resource box as listed
above.