Step 2: Enter the legal name and trade name
The legal name is the name on the formation document. For an LLC it is the name on the Articles of Organization. For a corporation it is the name on the Articles of Incorporation. The trade name is a DBA if the business operates under a different name. If the legal name and the trade name are the same, leave the trade name blank.
Step 3: Enter the mailing address and the principal location
The mailing address is where the IRS sends the EIN confirmation letter. The principal location is the physical address where the business operates. If the business is home-based, the IRS accepts the home address but the application flags mail to a residential address. Most applicants use the home address without issue.
Step 4: Pick the entity type and reason for applying
The application offers a dropdown of entity types. Pick the one that matches the formation document. The reason for applying is usually Started new business. Other valid reasons are Hired employees, Compliance with IRS withholding regulations, Created a trust, and Purchased an active business. The reason drives which tax accounts the IRS opens for the EIN.
Step 5: Enter the responsible party's information
The responsible party's name must match the IRS records for the SSN or ITIN. The IRS does not validate the match at the time of application but will reject the EIN if the names do not match in a later filing. Use the legal name on the Social Security card. Skip the optional fields for the third-party designee unless you are using a tax professional to file.
Step 6: Submit and save the confirmation
The IRS issues the EIN on the screen and emails a PDF confirmation. Save the PDF, print a copy, and store the EIN in the same place you store the formation documents. The IRS sends a follow-up letter by mail in 4 to 6 weeks but the online confirmation is the official record.
Common rejection reasons and how to fix them
Most rejections come from three problems. The first is a name mismatch between the responsible party and the IRS records for the SSN. The fix is to update the name on the Social Security card with the Social Security Administration and re-apply. The second is a third-party designee that the IRS suspects is using the application to farm EINs. The fix is to apply as the responsible party without a third party. The third is a responsible party who has already received an EIN that day. The fix is to wait until the next calendar day and re-apply.
What to do after the EIN is issued
Open a business bank account with the EIN, the formation document, and the EIN confirmation letter. Most banks want a copy of the formation document and a government-issued photo ID for the signer. File any state-level tax registrations the state requires. Some states like California and Texas require a state-level tax ID that runs alongside the federal EIN. Update the operating agreement or bylaws to record the EIN. The EIN is required on every federal tax filing from the formation date forward.
When the online application is not the right path
Use the fax or mail path on Form SS-4 if any of the 6 eligibility questions on the IRS landing page are yes. The eligibility questions cover non-U.S. residents without an ITIN, applicants with a foreign address, and entities that are not standard LLCs or corporations like certain trusts and estates. The fax path takes 4 to 7 business days and the mail path takes 4 to 6 weeks. The online path is the fastest and is available 7 a.m. to 10 p.m. Eastern Time Monday through Friday.
Photo: stevepb, Pixabay Content License, via Pixabay (https://pixabay.com/photos/tax-forms-income-business-468440/)
Fazlur Rahman
