An EIN is likely the first government filing a new business will make.
The entrepreneurial spirit is part of Latino culture. This is the reason why many Latino businesses are now thriving in our communities. However, starting a business is a challenging process.
One aspect that is daunting to many Latino business owners is dealing with the Department of the Treasury Internal Revenue Service (IRS). Fortunately, business owners do not have to deal with the IRS daily. Ordinarily, they will tend to deal with the IRS at least once a year when filing a tax return and when applying for an Employer Identification Number (EIN). Obtaining an EIN should be a fast and easy process.
An EIN is also known as a Federal Employer Identification Number and involves probably the first government filing a new business will have to make.
This number is used to identify a business entity and is issued by the IRS. The IRS assigns this number free of charge. An EIN is required to file taxes, open business bank accounts, hire employees and maintain a payroll, and obtain government benefits, like, liquor and firearms licenses.
Although not all business owners are required to obtain an EIN, e.g. sole proprietors, the majority of business do. For example, a business owner whose business operates as a partnership or corporation is required to obtain an EIN.
To obtain an EIN, a business owner needs to submit a Form SS-4 to the IRS. Most often this is done electronically through the IRS.gov website, or by mail. The SS-4 is filed by a business through a “responsible party”, who can be a principal officer, general partner, grantor, owner, or person designated to be a “responsible party” in writing. It is the “responsible party” who needs to make sure that the SS-4 is filled in completely and that the information presented is accurate. One item that is often accidentally omitted in the SS-4 is the social security number of the responsible party filing the application.
If the business, office or agency, filing the SS-4, is located in the United States and the responsible party is a legal resident of the United States, the SS-4 application can be submitted online, by fax, or mail.
The online application is the fastest way to obtain an EIN but is restricted to only one EIN per responsible party per day. Although filing an SS-4 online will yield an almost immediate issuance of an EIN, it can take approximately two weeks for the IRS to process a faxed application, and approximately six weeks to process an application filed by mail.
Once you have received your EIN from the IRS, you are essentially in business, and can start opening up accounts, hiring and paying employees, and filing for licenses. For more information concerning the process entailed in obtaining an EIN, I refer the reader to the IRS website at www.irs.gov.