Taxpayer ID Number

Definition:

A 9-digit number obtained from the IRS by a business with paid employees. If you're a sole proprietorship, your taxpayer ID number is your social security number.

One of the first steps you will take as a business owner is toobtain a taxpayer identification number so the IRS can process yourreturns. There are two types of identification numbers: a SocialSecurity number and an Employer Identification Number (EIN). Sinceyou most likely already have a Social Security number, let’saddress the issue of EIN numbers.

The EIN is a nine-digit number the IRS issues. It is used toidentify the tax accounts of corporations, partnerships and otherentities. You need an EIN if you have employees, operate yourbusiness as a corporation or partnership, or have a Keogh plan. Besure to include your EIN on all returns or other documents you sendto the IRS.

You can apply for an EIN through the phone, fax or mail,depending on how soon you need to use the EIN. If you apply bymail, be sure to send in Form SS-4 (Application for EmployerIdentification Number) at least four or five weeks before you needthe EIN to file a return or make a deposit. If you apply by phone(toll-free at 866-816-2065), the IRS will give you one immediately.Before you call, the IRS suggests you complete Form SS-4 so youhave all relevant information available. The person making the callto the IRS must be authorized to sign the form.

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