Employer Identification Number (EIN)

What is an Employer Identification Number?

An Employer Identification Number (EIN) is a nine-digit number assigned to businesses by the Internal Revenue Service (IRS)  for tax purposes. EINs are assigned to sole proprietorships, business owners with employees, corporations, partnerships, nonprofit entities, trusts, estates and government agencies.

Deeper definition

Like a Social Security Number (SSN) or an Adoption Taxpayer Identification Number (ATIN) for individuals, the IRS assigns EINs in order to organize tax payments. The number identifies a company as an employer and allows the company to submit information about wages and salaries paid out to employees.

Note that sole proprietorships without employees are not required to have an EIN. If a business has one or more employees, it must have an EIN. Businesses identify themselves with EINs on tax returns, business licenses, business permits, and a variety of other government applications and forms. They also use it when opening a business bank accounts and taking out loans.

Find the tax forms and information needed to run your business at the IRS Tax Forms center on Bankrate.com.

Example of an EIN

Doris is establishing a retail business. She plans to hire a few people to help her run the business. She knows that she will need to send the IRS documentation of the income she pays these individuals as well as taxes over the course of the year. She files for an EIN through the IRS website. She receives a nine-digit number that ensures she can file this information correctly.

Other Taxes Terms

Individual Taxpayer Identification Number (ITIN)

The Individual Taxpayer Identification Number (ITIN) is a tax term you should know.

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Adjustments to income

Adjustments to income can reduce the amount of tax owe. Bankrate explains.

Adoption taxpayer identification number (ATIN)

What is an adoption taxpayer identification number? An adoption taxpayer identification number (ATIN) is temporarily given to children who are in the process of being adopted when the adopting family doesn’t have or doesn’t know the child’s Social Security number. When the adopting parents file their tax returns and list an adopted child as a […]

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