It takes about 20 minutes total to complete the “paperwork” (quotation marks denote irony because everything is digital now) necessary to start operating your business as a legal entity. This includes registering your business for an Employer Identification Number.
Even if you don’t plan to employ anyone, your business needs an EIN for tax purposes. This means dealing with the dreaded IRS.
Don’t panic! They’ve actually streamlined the process so it’s super easy and intuitive, but just in case you’re still nervous, here’s a step-by-step guide to walk you through it. It should take you less than 10 minutes as long as you’ve already registered your business with your state’s secretary of state.
Step 1: Go to IRS.gov. Specifically, go to https://sa.www4.irs.gov/modiein/individual/index.jsp, where you should see this screen:
Step 2: Select the type of entity for which you need the EIN.
If you’re doing this on your own, you’re likely looking to register a “Sole Proprietorship” or “Limited Liability Company.” The former is fine, but an LLC offers benefits that an SP does not, such as additional legal protections.
After you click “Continue,” you’ll get a confirmation page that clarifies what an LLC is. This page includes links to some FAQs, but there are no more tasks.
Step 3: Decide how many people will work for/under the LLC – including yourself – and the state in which the LLC’s physical address is located.
At this point, the IRS will give you one of those “Are You Suuuuuure?” prompts. They’re basically telling you that if you change your mind later, you’ll have to spend more time and money reregistering your EIN. If you have no plans to update the status of your LLC within the next year – that is, if you don’t plan to hire on more help or to downsize – move on to the next step.
If you’re still not sure, the IRS has helpful links both within the body of their explanation and on the right-hand sidebar.
If you’re still not sure, it’s time to visit your local library and/or lawyer up. Again, you can make changes to how your business operates and refile later, but it’s best to make sure you file correctly the first time in order to avoid additional fees.
Step 4: Next, you’ll explain specifically why you’re requesting an EIN.
This guide assumes you’re just starting your business. You’ll notice the page above also mentions hiring employees or changing your organization type. If your needs change over time, you can restructure your company.
Step 5: This is where you – that is, the responsible party – fill in your name and social security number.
This is so the IRS knows you’re an actual person and not Barney the Dinosaur operating a shell company.
Step 6: The next four screens request additional identifying data.
Some of this is just for the nerds from the Department of Data and Statistics.
Step 7: Decide how you want to receive your confirmation letter – digitally or via post.
Step 8: Celebrate ‘cause you just got an EIN for your business. You should see a confirmation screen that includes the legal name of your business for the purposes of filing taxes as well as the EIN itself.
If you don’t see this screen, then something about your application doesn’t add up. For example, if [your state]’s Secretary of State hasn’t completed filing the paperwork you submitted to register your LLC, the IRS may not be able to find your business’ name in its database. If this is the case, you won’t be able to get your EIN yet. This is because, as far as the IRS is concerned, you’re trying to get an EIN for a business that doesn’t exist.
Either way, this is probably the easiest time you’ll ever have dealing with the IRS, so enjoy it.