When do i need an fein number

In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. When EIN Is Required for Sole Proprietors If you're a sole proprietor, you must have an EIN to: hire employees have a Keogh or Solo k retirement plan, buy or inherit an existing business that you operate as a sole proprietorship incorporate or form a partnership or limited liability company , or file for bankruptcy.

There are two good reasons to use an EIN instead of your Social Security number: Avoid identity theft Theft of taxpayer's identities has become a rampant problem--identity thieves steal taxpayer's Social Security numbers and use them to file fraudulent tax returns and obtain tax refunds.

Help Establish Independent Contractor Status Using an EIN on your tax returns and payments also helps to show that you're an independent businessperson—in other words, an independent contractor and not an employee. Talk to a Tax Attorney Need a lawyer?

Start here. Practice Area Please select Zip Code. How it Works Briefly tell us about your case Provide your contact information Choose attorneys to contact you. Log in. Get started. Stephen Fishman. Can you use an EIN instead of a social security number?

You can use your Social Security number unless: You hire employees Your LLC elects a corporate-style taxation structure You have a Keogh or solo k retirement plan An existing business is bought or inherited and you plant to operate it as a sole proprietorship, or You file for bankruptcy.

Download MileIQ to start tracking your drives Automatic, accurate mileage reports. Get Started. What are the advantages of having an EIN? Can I get an EIN over the phone? When do you need a new EIN? Additionally, there are specific instances where you will need to get a new EIN: Existing business transfers either through a purchase or inheritance to someone who plans to run it as a sole proprietorship Business changes from a sole proprietorship to a corporation or partnership Company changes from a partnership to a corporation or sole proprietorship Conversely, the business changes from a corporation to a partnership or sole proprietorship Individual owner dies, and business is taken over by the estate.

How have you been tracking your miles? Start tracking drives automatically with MileIQ! Related Blog Posts. Household employers and their agents — If you are employing someone to help in your home, you are considered a household employer and likely need an EIN to report payroll tax withholding. Similarly, if you are acting as an agent for a household employer, you can apply for an EIN for that person.

Individual bankruptcy — When individuals file for bankruptcy under Chapter 7 or Chapter 11 of the Bankruptcy Code, the bankruptcy estate that is created is its own legal, taxable entity that needs its own EIN. Married spouses filing a joint bankruptcy petition will each need an EIN. As such, they need their own EINs. The following are reasons why you may need an EIN: Banking and finance — In many cases, banks and credit unions require a valid EIN in order to open a bank account for any type of business, an estate, or non-grantor trusts.

Having an EIN may also be helpful for a business seeking to obtain financing or working capital. Employees — If you are hiring employees whether one or many , you will need an EIN. This is the number the IRS will use to track your payroll tax remittances.

Business owners establishing a form of business other than a sole proprietorship will also need an EIN, regardless of whether or not the business will have any employees.

Your EIN will be used to track your business income taxes. Situations where sole proprietors may need an EIN — Sole proprietors who are filing for bankruptcy for their business will need an EIN, as will those who purchase or inherit an existing business that they intend to run as a sole proprietorship going forward. That information includes: the legal name of the entity that needs the EIN, and the trade name if different ; the person authorized to act for that entity this may be a corporate officer, a partner, an executor, a trustee, etc.

You may have several reasons; however, you must choose one. Common reasons include starting a new business, hiring employees , banking purposes, creating a new trust, creating a new pension plan, changing the type of business entity, and purchasing an existing business be prepared to also provide the date you purchased or acquired the business ; the closing month of your accounting year.

For the majority of businesses and others requesting EINs, a calendar year is used. However, check with your tax professional to determine whether it makes sense to use a different fiscal year; an estimate of the highest number of employees you expect to have in the next 12 months after applying this may be zero ; the first day you paid wages to employees, if applicable; the principal business activity you are engaged in.