When to obtain an EIN?

The Employer Identification Number (EIN), also known as the Federal Employer Identification Number is a nine-digit number issued by the Internal Revenue Service (IRS).

It is assigned to business entities carrying out commercial activities within the United States. Obtaining an EIN is required for the recognition of the company and filing taxes.

This number is known as Taxpayer Identification Number (TIN) when it is used for the purpose of recognition rather than company tax reporting. Employer Identification Number (EIN) is commonly related to employment tax reporting. A nine-digit tax number is often required in order to open a bank account or transact business.

Why EIN? #

A business needs an EIN in order to pay employees and to file business tax returns. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc. a business must obtain an EIN.

Those businesses that do not are considered proprietorships and the Owner / Operator SSN is used on any tax documents. Also, financial institutions such as banks, credit unions, and brokerage houses will not open an account for a corporation without an EIN. Since all corporations – including ones with no income – must file at least a federal income tax return, a corporation operating or incorporated in the United States generally must obtain an EIN anyway either before or after being issued its charter.

Do I need an EIN for Stripe? #

If you have a sole proprietorship, you do not worry about having an EIN. You can skip that field when you activate your account in Stripe.

why i need ein

However, we highly recommend you obtain an EIN. It will not take longer than 10 business days. We will keep in touch with you for every step.

To use Stripe, a verifiable tax number must be entered (Employer Identification Number or Social Security Number). If you do not have an Employer Identification Number (EIN) and are an individual (LLC, Sole Proprietor, etc.), your Social Security Number can generally be used instead of the EIN. If you don’t know which number to enter, please consult us!

By uploading the EIN letter also known as Letter 147C, you can update your TIN (Tax ID) when you get your EIN. Entering your information on the Stripe is very important as it is stated in the EIN letter. EINs do not expire. Once an EIN has been issued to an entity, it will not be reissued.

EIN for Sole Proprietors #

Obtaining an EIN is very essential for your business. Some companies do not need one, though. There is no need to get an EIN for those who own a sole proprietorship. However, having an EIN is needed to have a sole proprietorship hiring staff. We highly suggest that you apply for an EIN in both cases.  Obtaining an EIN will certainly make your business more professional. 

If you have any further questions, please feel free to contact us via e-mail, phone call, or online customer support.