How to Obtain an EIN: A Step-By-Step Guide for Corporate Formation

If you’ve been keeping up with our corporate formation series, your company is now like a newly constructed building—its bylaws are the blueprint, the stock ledger is the foundation, and the minutes book ensures every floor is built to code. Now, it’s time to install the key that unlocks the doors to opportunity: your Employer Identification Number (EIN). This essential identifier allows your business to legally hire employees, open bank accounts, and comply with tax obligations, making it a crucial step in bringing your corporate vision to life.

What Is an EIN?

Think of an Employer Identification Number (EIN) as your business’s unique identifier—its version of a Social Security number. Issued by the Internal Revenue Service (IRS), this nine-digit number is used to identify your corporation for tax purposes. Whether it’s reporting employment taxes, opening a business bank account, or applying for licenses and permits, an EIN is often the first step in making your business legally functional.

Why is it so important? For corporations, particularly in the U.S., an EIN is a requirement. Without it, your company may be unable to fulfill essential obligations like paying federal taxes, establishing credibility with financial institutions, or hiring employees. Essentially, an EIN isn’t just a number; it’s your ticket to operating as a legitimate business entity.

Why Is an EIN Relevant to Corporate Formation?

An Employer Identification Number (EIN) is a cornerstone of establishing your corporation as a fully operational entity. After obtaining your Certificate of Incorporation, applying for an EIN is typically the next critical step. Without it, your business might face roadblocks in carrying out essential tasks that are foundational to its growth and compliance.

For instance, most banks require an EIN to open a corporate bank account, which is crucial for separating your business finances from personal ones. An EIN also unlocks the ability to hire employees and fulfill payroll tax obligations—a key milestone for corporations looking to expand. Furthermore, it’s often a requirement to obtain state and federal licenses or permits, ensuring your business operates within the bounds of the law.

In essence, an EIN bridges the gap between legal formation and day-to-day functionality, making it an indispensable part of the corporate formation journey.

Steps to Obtain an EIN

Obtaining an Employer Identification Number (EIN) is a straightforward process when you know the steps involved.

1. Determine Your Eligibility

Before you begin, ensure your business meets the IRS eligibility requirements:

• Your business must be legally formed with a principal place of business in the U.S.
• The person applying must have a valid taxpayer identification number, such as a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

If you meet these criteria, you’re ready to move forward.

2. Choose Your Application Method

The IRS provides several ways to apply for an EIN, so choose the method that best suits your needs:

• Online: This is the fastest and most convenient option for most applicants. You can complete the application on the IRS website and receive your EIN immediately after submission.
• Fax: If you prefer, you can fill out Form SS-4 and fax it to the IRS. Processing typically takes a few business days, and your EIN will be sent to you by return fax.
• Mail: For those who don’t need an EIN urgently, you can mail a completed Form SS-4 to the IRS. However, processing times can take 4-5 weeks.
• Phone (International Applicants): If your business doesn’t have a U.S. address, you can apply for an EIN by calling the IRS at the international number provided on their website.

3. Complete Form SS-4

No matter which method you choose, filling out Form SS-4 accurately is crucial. Here are some key fields you’ll encounter:

• Legal Name: Enter the exact name of your business as it appears on your Certificate of Incorporation.
• Business Type: Specify your corporation type (e.g., C-Corp, S-Corp, or partnership).
• Reason for Applying: Check the appropriate box (e.g., “Started a new business” or “Hired employees”).

Make sure to double-check the form for errors before submitting it to avoid delays.

4. Receive and Secure Your EIN

Once your application is processed, you’ll receive your EIN. If you apply online, it’s available immediately; for other methods, the IRS will send it via your chosen communication channel.

Securely store your EIN in a safe place, as you’ll need it for filing taxes, opening business bank accounts, and completing corporate filings. Misplacing it can cause unnecessary delays and complications.

By following these steps, you’ll quickly obtain an EIN and equip your corporation with the necessary credentials to operate legally and efficiently.

Conclusion

Securing an Employer Identification Number (EIN) is a crucial milestone in your corporate formation journey. It enables your business to meet tax obligations, hire employees, and establish financial credibility. By following a clear and straightforward process, you can ensure your corporation is ready to operate efficiently and legally. Don’t miss the final article in this series, where we’ll discuss board resolutions and when they must be included in the minutes book.

Are you wondering about any of the issues mentioned above? Please email us at info@wilkinsonlawllc.com or call (732) 410-7595 for assistance.

At Wilkinson Law, we give business owners the clarity they need to fund, grow, protect, and sell their businesses. We are trustworthy business advisors keeping your business on TRACK: Trustworthy. Reliable. Available. Caring. Knowledgeable.®