You might want to consider getting an EIN just to be on the safe side—it will be there if you’re ever called upon to provide one. It doesn’t cost anything, so why not make a small investment of your time? A tax ID for a business serves the same purposes as a Social Security number for individuals. The general term is “taxpayer ID,” which can be one of several different numbers. An Employer ID is a taxpayer ID for a business, whereas a Social Security number is a taxpayer ID for an individual. Another type of tax ID is the “Individual Taxpayer Identification Number (ITIN). It’s a tax processing number used for people who need a tax ID but who can’t get a Social Security Number. Some other reasons your business might need an EiN:
If you file tax returns for employment taxes, excise taxes, and alcohol, tobacco, and firearms.If you withhold taxes on income (not wages) paid to a non-resident alienif you have a Keogh plan (a retirement plan for self-employed people).
You might not need an EIN for tax purposes if your business is a sole proprietorshi and you don’t have employees. In this case, your EIN is your Social Security number. But you might need an EIN when you start your business and apply for a business checking account. You might also need one if you’re applying for a business license. The IRS wants you to include the name and taxpayer ID of the person who controls, manages, or directs your business and the disposition of its funds and assets. The responsible party can’t be a business; it must be a person. If your business has more than one such person, just select one for the application. The IRS has limited Form SS-4 submission to one per day since 2012, and this rule covers all submissions, whether they’re made online, by fax, or by U.S. mail.
When you do need a new EIN:
You will need a new EIN if:
you change your business typeyou purchase or inherit an existing business that you operate as a sole proprietorshipyour business is a subsidiary of a corporation using the parent’s EIN or you become a subsidiary of a corporationif a new corporation is created after a statutory merger.
When you don’t need a new EIN:
Sole proprietors must get a new EIN if they are subject to a bankruptcy proceeding, but if your corporation or partnership declares bankruptcy, you don’t need an EIN. Other cases in which you need a new EIN:
If you simply change the name or address of your business.If your corporation elects S corporation status.If you end your partnership business and begin a new one.
