- Hi everyone, I'm attorney Aiden Durham
with 180 Law Co in Colorado.
And you're watching "All Up In Yo' Business"
(guitar music)
On this episode of "All Up In Yo' Business"
I'm gonna talk about EINs, otherwise known
as employer identification numbers, or tax ID numbers.
Does your business need one?
If it doesn't need one, should it have one anyway?
How do you get one?
What happens if your business changes?
Do you need to get a new one?
All that fun stuff, but first don't forget to like subscribe
and share and check the description
for links to additional information and resources.
I'm also going to do a special members only
video to compliment this video.
So check that out by going to the memberships tab
on my channel page and become a member
if you want access to that extra content.
So EINs, as I mentioned EIN stands
for employer identification number.
It's also sometimes referred to as a federal tax ID number.
Simply put the EIN is kind of like
a social security number for your business.
The name is a little misleading,
when you hear employer identification number
you may think this is only needed if I have employees
and well that is kind of true,
there are a lot of instances where you may still
need an EIN even if you do not have employees.
If you operate your business as a sole proprietorship
either under your own name or under a DBA or trade name,
and you don't have employees,
then you don't need an EIN.
You can just use your own social security number
in that instance.
This applies, even if you operate
multiple businesses under multiple DBAs,
you can still use your social security number
for all of them.
You still can get an EIN as a sole proprietor,
but you don't really need one.
For the most part you only need an EIN as a sole proprietor
if you have employees.
If you operate your business as a single member LLC
and your tax as a sole proprietorship,
meaning you haven't elected to be taxed
as a C Corp or S Corp, then you don't need an EIN.
Same goes for if you convert your sole proprietorship
or DBA into a single member LLC,
you won't need an EIN.
I say you don't need one because legally you don't need one.
The IRS doesn't require that you have one in that instance.
But most banks are gonna require that you have an EIN
if you wanna open a business bank account.
And since the first rule of LLC ownership
is keeping things separate,
having a separate bank account for your business,
then in that sense,
you do actually kind of need an EIN.
And again going back to the whole separateness thing
and you and your business are not one in the same,
I think it's just kind of good business practice in general
to have an EIN for your single member LLC
even if it's not required.
It's just one more little thing that you
can do to separate yourself from the business.
If you operate your business
as a partnership, multiple member LLC, corporation,
or if you're single member LLC elects
to be taxed as a corporation,
then in that case you do need an EIN.
You will apply for an EIN
through the IRS and it is free to do so.
The IRS doesn't charge a fee for getting an EIN.
This is important because if you google something
like EIN application, you may find websites that look
like they're the IRS or the right application,
ignore all of those.
You wanna be on irs.gov.
Any other website that purports to be the EIN application
is either a scam or some kind of filing
or business formation service
that's totally fine if he wants to pay a service
or professional such as a lawyer
or an accountant to apply for the EIN on your behalf.
But if it's free and it's not on irs.gov,
then it's probably a scam trying to get
your personal information so they can steal your identity
or do something else really bad with your info.
So you can go to irs.gov and type EIN
into the search bar to find the online application.
I've also linked directly
to the online application down in the description
so you can check that out as well.
The online EIN application,
will ask you some questions about you and your business,
it's fairly straightforward for the most part.
Then once you submit the application,
in most cases it will be accepted right away
and you'll get a copy of the EIN confirmation letter
right then and there.
Save this letter immediately,
the IRS isn't going to email a copy
of it to you or anything like that.
This is your only opportunity to save that letter.
If you close out your web browser
and haven't saved the document,
then you'll need to call the IRS to get
that information again,
which usually means waiting on hold for at least an hour
or some other ridiculous amount of time.
Or you can submit the application via mail or fax.
The form that you'll use is called form SS-4.
Applying online through the IRS is online
application is the easiest
and quickest way to get the EIN though.
But sometimes we'll need to use
the paper application anyway.
Occasionally, if you've gone
through the online application and you hit
that submit button at the end,
you'll sometimes land on a screen telling
you that there has been some of error.
It will give you an error code
and tell you to call the IRS and reference that error code.
There are a lot of different reasons
you might get an error when you try
to submit the online application.
In my experience the most common reason
this happens has to do with the business's name.
If somebody else applied for an EIN
with the same business name,
the IRS has system doesn't know how to handle that
and they'll kind of freak out and give you that error.
Now that doesn't mean you need
to go freaking out right away.
That doesn't necessarily mean you can't
use that business name or that it's already trademarked
or anything like that.
The IRS doesn't care about trademarks,
they're not gonna tell you
if the business name isn't available.
It just means they already have an EIN associated
with that name,
and because of that, the online application won't work.
But that may be a good reason to search the USPTA database
or have an attorney perform a trademark clearance search,
just to make sure you aren't potentially infringing
on another business's trademark.
But anyway, if you get an error
when you try to submit the application online,
then you'll probably just be better off
submitting the paper form via fax or mail,
rather than calling the IRS and waiting on hold.
You'll also have to submit it by fax or mail
if you don't have a social security number
or if you or your business
aren't located in the United States.
The online application requires a social security number
for the responsible party who will be the IRS's
kind of primary contact regarding the EIN.
And it only allows you to answer an address
that's located in the United States.
So if you don't have one or both of them,
then you won't be able to use the online application.
If you fax the application and provide your own fax number
then the IRS will usually reply within a few days,
with confirmation of your EIN.
Their website says typically four days
but it's sometimes takes a bit longer.
If you're not a lawyer tax professional
or 90 year old who still has a fax machine,
then you can send the SS-4 form by mail.
The cover page of this form will give you the fax number
and the address that you can send it to,
depending on where you're located.
If you submit the form by mail or if you fax it
and don't have a return fax number,
then the IRS will mail you the EIN confirmation letter
typically within about four weeks.
Again, that's what their website says but it's not uncommon
for it to take a little bit longer than that.
Lastly, international applicants who don't have an address
or location in the United States,
you guys can also apply for the EIN by phone.
As I mentioned earlier,
I'm gonna make a special members only how to video
to go along with this one.
In that video, I'll walk you guys
through both the online application and the SS-4 form,
and show you exactly how to fill it out.
So if you are confused about how to fill out
the online application or the paper form,
make sure you check out my channel memberships
for access to that members only how to video.
Of course, if you have trouble with either
or you're not sure how to properly complete the application,
it's always best to consult with a lawyer
or a tax professional for more help though.
So let's say you've done all that and you have the EIN,
then something in your business changes.
Do you need to get a new EIN?
Sometimes yes sometimes no.
If you operate as a sole proprietorship
and you do have an EIN already,
you'll need to apply for a new one
if you're subject to bankruptcy proceedings,
if you incorporate the business,
if you take on business partners or if you purchased
or inherit an existing business that you operate
as a sole proprietorship.
But you won't need a new EIN
if you change the business's name or DBA,
if you change your location or add other locations
or if you start or operate multiple businesses
as a sole proprietorship.
If you've been operating as a single member LLC
and you don't already have an EIN for the LLC,
and then you elect to be taxed as a C Corp or S corp,
then usually you will need to apply
for a new EIN in that instance.
However, this isn't usually the case
for existing LLCs that already have an EIN.
In that case you typically won't need a new EIN just
because you decide to elect to be taxed as a corporation.
These are just a few examples
of when you might need a new EIN.
There are certainly other situations
when you may need a new one.
But these are just some
of the more common reasons you might wonder,
do I need a new EIN?
Generally speaking for most businesses
whether it's a sole proprietorship, partnership,
corporation or LLC, you won't need a new EIN
if you change the business name,
move the business to a new location or add locations.
Those things don't really affect your federal tax status
so the IRS doesn't really care.
It's usually only if the change has some effect
on the businesses' federal tax status
that you might need a new EIN.
As always with anything having to do with your business
or taxes especially, it is best to consult with a lawyer
or a tax professional to determine the proper way
to handle it.
Every situation is different and the rules
don't always apply exactly the same to everybody.
That's all for this episode folks,
drop a comment below, let me know what you think.
And again, don't forget to check the description
for links to additional information and resources
including a link directly to the IRS's online application.
Finally, be sure to check out my channel memberships
if you want access to that special members only
how to video, where I will walk you
through exactly how to complete
and submit the online application and the paper SS-4 form.
There's a link to the membership page
down in the video description,
or you can check the membership tab on my channel page.
Thank you all so much for watching I'm Aiden Durham
and I'll see you next time.
(soft music)