Demystifying Your IRS Account Number, EIN, and 147c

As a small business owner, navigating the intricacies of the IRS can feel like traversing a maze without a map. From deciphering complex tax codes to understanding payroll requirements, the journey can quickly become overwhelming. ?

We are here to help you break down an important starting point – your IRS account number or Employer Identification number. ??

What is an EIN??

The IRS Account Number, also known as the Employer Identification Number (EIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. It's often referred to as a federal tax identification number and is similar to a Social Security number but is used for business entities instead of individuals.?

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How to obtain an EIN??

Applying for EIN takes a few steps. The most important thing to note, applying for your EIN is completely free. Ensure you are applying directly with the IRS and avoid other applications.?

1. Determine Eligibility: You can apply for an EIN online if your business is located in the United States or U.S. territories and if the person applying has a valid Taxpayer Identification Number (SSN, ITIN, or EIN).?

1. Access the Online EIN Application: Visit the IRS website and navigate to the EIN Assistant page.?

1. Start the Application: Choose the "Begin Application" option.?

1. Select Entity Type: Choose the entity type that best describes your business. Options include sole proprietorship, partnership, corporation, LLC, estate, trust, and more.?

1. Complete the Application: Provide the necessary information about your business, such as the legal name, trade name (if applicable), address, type of business activity, number of employees, and the reason for applying. You may also need to provide the name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the responsible party.?

1. Review and Submit: Review all the information you've entered to ensure accuracy. Once you're satisfied, submit the application.?

1. Receive Your EIN: Upon successful submission, you'll receive your EIN immediately. You can download, save, and print the confirmation notice for your records.?

Why do you need an EIN??

Businesses need an Employer Identification Number (EIN) for several important reasons:?

1. Tax Identification: An EIN serves as the primary identification number for businesses for federal tax purposes. It's similar to a Social Security Number (SSN) for individuals but is used specifically for businesses.?
2. Filing Taxes: Businesses use their EIN when filing various tax returns, including income taxes, employment taxes, and excise taxes. It helps the IRS and other government agencies track and process tax-related information accurately.?
3. Employment Purposes: If a business hires employees, it needs an EIN to report wages and withholdings to the IRS. The EIN is also used for payroll tax reporting and other employment-related tax obligations.?
4. ?Opening Bank Accounts: Banks typically require a business to have an EIN before opening a business bank account. This allows the bank to identify the business for financial transactions and reporting purposes.?
5. ?Obtaining Business Licenses and Permits: Many states and local jurisdictions require businesses to have an EIN when applying for business licenses, permits, or registrations. It helps government agencies track businesses for regulatory compliance and tax purposes.?
6. ?Business Credit: Establishing an EIN allows a business to build its credit profile separate from the owner's personal credit. This is important for obtaining business loans, lines of credit, and other forms of financing.?
7. ?Legal Entity Identification: An EIN helps differentiate between different legal entities, such as sole proprietorships, partnerships, corporations, and LLCs. It's essential for accurately identifying the business entity when dealing with legal matters, contracts, and business transactions.?

Overall, having an EIN is crucial for businesses to conduct various financial and legal activities, maintain compliance with tax laws and regulations, and establish their identity for administrative and reporting purposes.?

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Need to locate your EIN or IRS Tax Account number? Get a 147c letter.?

Calling the IRS directly is the fastest way to request your official EIN. Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at 800-829-4933. The hours of operations are 7:00 A.M. - 7:00 P.M. local time, Monday through Friday. Full guidance can be found here.??

The IRS will send you an official 147c letter with your business’ EIN number.??

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State Tax ID Application ?

While EINs serve as identifiers by the Internal Revenue Service (IRS), state tax IDs, also known as state EINs or state tax registrations, are used by the state to identify a business for tax administration purposes. These identification numbers are unique to the state of business operations and typically hold limited relevance beyond state borders. Meaning, if you were to relocate your business to a new state or expand your business into another or multiple states, you?must?register for a new state tax ID number with that state, while your federal EIN?remains?the same. Typically, businesses that hire employees or that sell goods and services will need to register for a state tax ID number, but each case varies based on the state. Visit the IRS Government site to find your state’s Department of Revenue or Department of Taxation to learn about your state’s requirements. Although state requirements vary, the application process generally is relatively simple. Once you receive your state tax ID, be sure to keep this number with your other essential business documentation. ?

It’s important to note that failure to comply with state tax ID regulations could result in penalties and operational constraints so it’s imperative to do your research to ensure compliance. ?

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How to provide this information to Dominion Payroll?

Are you a current client looking to share your federal or state EIN? As a client of Dominion Payroll, our dedicated implementation team will have collected the EIN at the start of our partnership.? ? If you are missing your state account numbers, you will need to provide these numbers from a screenshot of an official website or share it on official letterhead. Please reach out to [email protected] with that information or if you have any questions about your state or federal tax account status! ?