I'm part of several entrepreneur Facebook Groups, and I consistently come across recurring questions – from how to kickstart a business to the expenses tied to it and other practical queries associated with entrepreneurship. One recent inquiry caught my attention: should it really cost $300 to get an EIN number? Well, the answer is it depends, but when I spotted that figure, it did strike me as a bit high, prompting me to delve into the topic further in today's blog post.
To begin with, the cost in question of obtaining an EIN might include factors that I was not privy to. For instance, did the person in question opt to pay an organization to handle the entire business setup, including EIN registration, creating the LLC (or another business type), and filing with the state? Indeed, there are service providers out there that offer comprehensive business setup assistance, and naturally, it comes with a price tag.
On the flip side, acquiring your own EIN directly through the IRS website is a fairly straightforward process, and it won't cost you a dime. I've gone both routes for my businesses – taking the DIY approach, obtaining the EIN, and handling the state filings, and also outsourcing the entire process. There's no one-size-fits-all answer; it ultimately depends on your comfort level with handling these tasks yourself and whether you're willing to invest the time in research to ensure compliance with local, state, and federal regulations.
In the initial stages, I recommend at least going through the process for one business on your own, even if you have someone guide you through it. This way, you become familiar with the intricacies, fees, and required documents for your county, state, and federal compliance based on the nature of your business. Knowing the process equips you for potential outsourcing in the future, ensuring you're not solely reliant on third-party services. If you choose to outsource from the get-go, be sure to ask questions to ensure you have all the necessary elements for your business.
How to Obtain Your Business EIN
Disclaimer: It's essential to note that the information provided here is for guidance purposes only. It is not legal advice, and you should consult with a legal professional to ensure compliance with your business.
Let's kick things off with a step-by-step guide on obtaining an EIN. The Employer Identification Number functions like your SSN but for your business, serving as a tax identification number. You can simply start by opening Google and searching for "ein number irs." Look for the non-sponsored result that says "Apply for an Employer Identification Number (EIN) online" – it should lead you to the official irs.gov website. For your convenience, you can also use this direct link:
The website outlines the steps and eligibility criteria for applying for an EIN. Take the time to read through the information, and below the "Apply Online Now" button, you'll find additional details that could be pertinent to your business – such as EIN purpose, reporting beneficial ownership information (refer to our previous blog post about Navigating FinCEN Beneficial Ownership Requirements), and exempt organization information. Each organization is unique, so we won't delve into those possibilities here.
Start Application
Once you've confirmed your eligibility, click on the "Apply Online Now" button. This will lead you to a new page with crucial information to review (not too much, I promise!), and from there, you can click "Begin Application." If you prefer not to apply online, you can download the SS-4 form and instructions for an alternative application method. However, the online application is swift, and you'll receive your EIN confirmation immediately upon completing the process.
The application is straightforward, posing questions about your business. Be prepared to specify the type of business you're incorporating, such as Sole Proprietorship, Partnership, Corporation, Limited Liability Corporation (LLC), Estate, Trust, or another organization. Depending on your selection, the subsequent questions will tailor themselves accordingly. For instance, if you're forming an LLC, you'll need to provide details on the number of members and the business location. Other questions pertain to the responsible party of the business (name and SSN). Continue to complete the prompted questions such as requested address information and additional details, then hit submit. Voila! Your EIN confirmation is there, and the best part – no cost. It becomes the key for your business in dealing with bank accounts, tax matters, and any other institution requiring verification of your business existence.
That's it! You've successfully obtained your EIN, completing a significant step in your business incorporation journey. Congratulations!
If at any point you find yourself unsure about the answers or if you feel unfamiliar with the process, don't hesitate to seek help. Whether it's reaching out to a third-party service or consulting a professional like a lawyer or accountant but remember that these services come with associated fees.
If you're seeking mentorship or guidance for your EIN application, schedule a call with us, and we'll explore how we can assist you.
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