What business clients should know about EINs

The topic of Employer Identification Numbers is sure to arise as accounting professionals help their business clients get all of their tax to-dos in order. When does a business need an EIN?

In this article, I’ll discuss what the IRS says about the circumstances when business entities need an EIN (a.k.a., a “federal tax ID number”). I’ll also cover some of the situations when a business may need to change its EIN.

When a business must have an EIN

Let’s take a moment to review what the IRS says about EINs.

The IRS requires an individual or business to have an EIN when:

• It has employees.
• It operates as a corporation or partnership.It files any of the following tax returns: Employment; Excise; or Alcohol, Tobacco, and Firearms.
• It withholds taxes on income, other than wages, paid to a non-resident alien.
• It has a Keogh plan.
• There’s involvement with any of the following types of organizations:

• Trusts (some exceptions apply);
• IRAs;
• Exempt Organization Business…

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