Social Security Number is used for all identification purposes while EIN is specifically for business use and in that too, for taxation purposes. It is compulsory for any business entity to get an EIN from IRS if any of the following conditions apply to his/her business.
- If it is a business body that has hired employees
- The structure of the business in corporation or partnership based.
- If your firm withholds income taxes on income of your employees.
- The business has a Keogh Plan
- If your business deals with organizations which are listed on the IRS website.
The basic use of EIN is in taxation whereas it can be used for other purposes as well, for example, creating a business bank account in your business name or getting credit cards and business permits in the name of your business.
When using your EIN for business interactions, you are at a lower risk of identity theft. This number can be given out to clients and employees without the fair of getting your identity stolen which would have been a serious concern if you were giving out your Social Security Number. EIN should be used for tax issues in business and not for lotteries or auctions etc.
If you run a corporation or a business and desire to have your account opened in banks, credit unions or other financial institutions in the name of your business, then need to have an EIN to achieve that.With the EIN in hand, you will be able to manage taxes such as income taxes and withholding taxes which will be a part of the incomes of your employees. Furthermore, you can create your own business account on the name of your business using your EIN. For other identification purposes, you should use your Social Security Number while for business related activities EIN is to be used.
Getting an EIN number has been made quite easy by IRS. The fastest way to get it is to go on the IRS website and fill in the online application form which is uploaded for this purpose. Please make sure that you do not leave any spaces unfilled which are mandatory. Also, note that improperly filled forms can lead to a delay in getting your EIN which is not what you would want. Once your online application is submitted, your data will be verified and you will be issued an EIN in the same session. Before 2001, the first two digits of an EIN represented the location in which the business was registered but that has changed now. EIN issuance is now centralized at three IRS campuses and so any of those campuses can issue your EIN. If rendered necessary, all the 10 campuses of IRS will issue you your EIN.
If you are uncomfortable with applying online, then you can fax or even mail IRS the filled application form and get a response from them in the same way, though these methods of application can be relatively time-consuming.
There is a special provision for International applicants as they can directly call the IRS office at 267-941-1099 for the issuance of their EIN. Please note that this number is not toll-free and call charges will be applicable. The timing for the call should be between 6 am to 11 pm, Eastern Time. The office is open to serve you on working days, that is, from Monday to Friday. If the applicant himself/herself is not making the call, then he should authorize the caller to fill his form through tele-conversation on his/her behalf. To do this, the caller must have the required information of the applicant so that it can be conveyed verbally to the IRS office representative. The authority goes null and void once the applicants receive the EIN and sign it and acknowledge its receipt.