Employer Indentification Number (EIN)
What is a EIN?
 EIN means Employer Identification Number. Sometimes the EIN is referred to as a Federal Tax Identification Number. An EIN is one way to identify your business to the IRS. Each EIN is 9 digits long and can be used by businesses with any business structure. You should use your EIN on all business tax forms and in all business correspondence with the IRS and the social security administration. You should only have 1 EIN per business entity you own.
Do you need an EIN?
Many business owners are unsure if they need an EIN. You need an EIN if you meet any of the following criteria.
- You have employees
- You operate as a corporation or a partnership
- You file employment, excise, alcohol or tabacoo and firearms tax returns
- You have a Keogh plan
- You operate trusts, Estates, real estate mortgage investment conduits, non profit organizations, farmers cooperatives, plan administrators
Most cloth diaper businesses operate as sole proprietorships and don't meet any of the other criteria. However, you may still want to apply for an EIN. Some people choose to use an EIN because it makes them feel more official. Many of us need to FEEL like a real business, and using an EIN is a good way to operate in a business like manner. Others choose to use an EIN for safety reasons. When you have an EIN you do not need to use your social security number on business tax forms and correspondence. You can also use your EIN to open your bank account and apply for any necessary business licenses. Using your EIN instead of your social security number decreases the likelihood that someone will randomly come across your social security number and steal your identity.
Do you need a new EIN?
Maybe you already have an EIN but are unsure when you will need a new EIN? The guidelines for getting a new EIN greatly depend on which business structure you have chosen for your business. Sole Proprietors are required to get a new EIN if they are filing for bankruptcy. In addition, a sole proprietor will need to get a new EIN if they take on a partner, or incorporate.
If you have chosen a different business structure, you can visit the IRS website to see when a new EIN is required.
How do you apply for an EIN?
It is now super easy to apply for an EIN. Simply visit the online form and answer the questions! You will receive your EIN immediately but your number will not become part of the IRS permanent files for 2 weeks. Don't forget that as a sole proprietor you can only have 1 EIN.
Help! I lost my EIN!
If you lose your EIN, DO NOT apply for a new one. There are a few ways that you can recover your number. First, look for the notice that the IRS mailed you as confirmation of and receipt for your EIN. If you opened a bank account with your EIN, you can contact your bank for a copy. Also if you registered for any business licenses, you can contact the issuing agency for a copy. Lastly, you can call the IRS at 800-829-4933, Monday through Friday from 7:00 AM - 10:00 PM. I recommend using this as a LAST resort. I am sure we have all at one time or another experienced first hand the joys of the IRS automated phone system.
I moved and need to update the IRS!
If you move and need to update IRS records, just mail in the change of address form.
How do I cancel my EIN?
EIN's are permanent. Even if you never use your EIN, it will never be assigned to another business entity. If you dissolve your business or decide you don't need an EIN after all, the IRS will close your account. It will not be deleted, however, so should you decide you want the EIN, you can reopen the account at any time. To close your account, send the IRS a letter to:
Internal Revenue Service
Cincinnati, Ohio 45999
You will need to state the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write. Otherwise, be sure to include the complete legal name of the entity, the EIN, and the business address. Also, you will need to file any tax returns and pay any owed business taxes before the IRS will close your EIN account.
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