Obtaining your company’s US tax number

Excerpt, IRS Form SS-4

One of the most important steps in the formation of a new company is the application for an Employment Information Number (EIN, or also FEIN). The EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States. Originally, the EIN was limited to reporting employment-related taxes, but it has since become a more generalized identification number for US corporations. Changes in the law since 2001 have made it impossible to get a bank account without one, and have also made much more difficult to obtain without a US Social Security Number (SSN, the US equivalent of an individual tax identification number).

For the average US citizen or holder of a US SSN or other US tax identification number, the EIN is simple to get. The application can be completed online and the EIN is provided immediately. Since you can’t save your online application session, it’s typically best to download and fill out the IRS Form SS-4 (pdf) so you can be certain you have all of the necessary information available.

Without a US tax number, however, the process becomes more complicated. Applications without an SSN can be filed by mail, fax, or telephone, but processing takes significantly longer. The IRS website claims response times as low as four days for faxed EIN applications or four weeks for mail. That used to be true, but in our experience processing time over the past few years can and sometimes does take far longer than that. Unfortunately, addressing those delays can be extremely difficult, since IRS agents typically can’t provide any additional information about applications once submitted.

Unfortunately, due to these delays, sometimes companies are tempted to call on a business partner or even friend to submit the EIN application on the company’s behalf. The IRS frowns on the use of these “nominees,” as they are called, stating that the responsible party on Form SS-4 must be a person who “controls, manages, or directs the applicant entity and the disposition of its funds and assets.” If you’ve already filed for an EIN using a nominee, you can (and probably should) update the company’s information by filing Form 8822-B

Part of an occasional series of posts on starting your business in the US.

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