Benefits of an EIN Number

1. Get EIN to Open a Bank Account in the USA

Most banks require businesses to present an EIN to open any business bank account.

You will be turned away if you try to open an account without your EIN. This gives you a hint about what is the EIN number. That’s when you’ll know how important EIN number uses are.

Your bank will use the EIN to confirm with the tax authority the legitimacy of your firm.

Once you have the EIN for foreign entity your account can be opened anywhere in the world. This also means that now you know what is EIN number and what is an EIN used for.

Typically, U.S. banks will need someone to show up in person, with formation documents, and EIN for the company.

Each bank has different policies for dealing with businesses with foreign ownership. While traveling to the country of your business origin, bring all necessary documents for opening the bank account.

These documents may include your EIN letter and certificate of incorporation. Plus, you also need to bring two pieces of photo identification.

Also, generally, you can go to a U.S. bank that also has locations locally for assistance in opening the US bank account. By now, you must be able to answer what is an EIN number.

2. Get EIN to Apply for Business Permits

Perhaps, you want to apply and get business permits for your business. But you are still wondering what is an EIN number and what is an EIN used for. In this case, you will need it the most in your own business.

Before you open a business, you also need to apply and get the necessary licenses and permits for operating your business.

Virtually, every business needs some form of license or permit to operate legally. These may include business licenses, seller’s permit, or a zoning permit, among many others.

Licenses and permits vary by the type of business you operate and where your business is located. Every business needs a basic operating license or permit – even if you’re home-based.

3. Get EIN to File Tax Return

Without exception, every business must provide a valid EIN to file taxes.

An EIN is similar to the Social Security Number (SSN) of an individual. It’s a Federal Tax ID which is a number used by the IRS. The IRS uses it to identify your business for tax purposes. This is one of the answers to your question, “What is an EIN number used for?”

While applying for an EIN, you’ll be required to provide specific information. One such information includes applying for an EIN number for hiring employees. Once you have submitted the information, the IRS system will automatically enroll you in the Electronic Federal Tax Payment System (EFTPS). This will enable you to make deposits either by phone or online.

Want to file your tax returns but do not qualify for a Social Security Number (SSN)? You may need the ITIN.

Individual Taxpayer Identification Number (ITIN) is a tax processing number. This number is issued by the IRS for federal tax reporting only. It is not meant to be used for any other purpose. ITIN is used on federal tax documents to file taxes.

IRS issues ITIN to those who are required to have a U.S. taxpayer identification number. However, these individuals do not have a Social Security Number (SSN). They are also not eligible to get one.

EIN application is typically much easier and only takes 5 days to get it. Still wondering what is an EIN number and what is an EIN used for? The usage will be worthwhile only if you apply for this identification number.

On the other hand, ITIN is a lot more complicated application. That’s because it requires a copy of your federal income tax return. Besides, it takes 6 to 7 weeks to receive it.

Make sure to know whether you need an Employer Identification Number (EIN) or Tax Identification Number (ITIN).

4. Get EIN to Start a Corporation or Partnership

Are you interested in forming a professional corporation or partnership? If yes, you should look for a professional lawyer who provides the contract review service. Once this is done, the IRS requires you to apply for an EIN before starting the legal procedure. Now that you know what is an EIN number and what is an EIN used for, it’s worthwhile to apply for it.

5. You Can Withhold Taxes

To fulfill the requirements of an employer who can withhold certain taxes on income, you should have an EIN. That will enable you to file the relevant taxes to the tax authority as required.

6. Get EIN to Apply For Credit Card

No business in the United States can be issued a credit card without having obtained an Employer Identification Number (EIN).

Having an EIN will allow your business to have an identity. Most credit card processors (including Paypal and Stripe) require you to have an EIN to open an account with them.

7. Get EIN to 

Apply for 

Loans

If you are looking to apply and get a loan, most institutions will require you to have an EIN.