Does your partnership need a tax ID number? Can you apply for a tax ID number for a partnership online? For both partnerships and corporations, a tax ID number will usually be used to separate the business into a separate tax-paying entity. Here’s what you need to know.
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Steps to Getting a Tax ID (EIN) Number for a Partnership
- Prepare Mandatory Business Information
- Apply for a Partnership Tax ID (EIN) Number Online
- Apply for a Partnership Tax ID (EIN) Number via Mail or Fax
- How Do I Obtain a Tax ID (EIN) Number for my Partnership?
- How Long Does it Take to Obtain a Tax ID (EIN) Number for my Partnership?
- Why Do I Need a Tax ID (EIN) Number for my Partnership?
What does an online EIN application consider “mandatory business information”? You don’t need much to apply for a tax ID number, you just need:
- The name that the company does business under.
- The structure of the business, in this case a partnership.
- The date that the business was initially created.
- The type of business that the company does.
- The reason the business has for getting an EIN.
In addition to this, one of the partners will need to provide their name and social security number (or ITIN), in the event that further information is needed. A registered agent can also be used, such as an accountant.
If you want to apply for a partnership tax ID (EIN) number online, you will need to first gather the mandatory business information outlined above. From there, you can contact a tax ID service, and fill out a simple form.
Once the form has been submitted, you should only need to wait about sixty minutes to get your EIN number. You’ll be able to use the EIN number once you receive it.
If there are any issues filing your application, you may need to update it and resubmit it.
To apply for a tax ID (EIN) number online, you want to have your basic business information on hand:
- Business Name as is or will be registered with your state.
- Responsible Party information including:
- Legal Name
- Social Security Number
- Physical Business Address
- Contact Phone Number
The same information that can be used for an online application can also be used for a mail or fax application. There aren’t any benefits to applying for a partnership tax ID through mail or fax instead of online, but it is an option.
To apply by mail, you will fill out a form with your mandatory business information on it. The processing time will take around four to six weeks, depending on how busy the season is.
To apply by fax, you will fill out the same paper form, but the form will need to be faxed in during business hours. The processing time will take around three to five business days.
Of these two options, mail takes longer, but fax tends to be more unpredictable. As faxes are older technology, transmissions can be disrupted or interrupted. At the same time ,mail can potentially be lost, and it will take a long time to correct any application errors.
The best way to obtain a tax ID number for your partnership is to apply for it online, though you can also apply for it through mail or fax. You’ll begin by collecting basic information about your business, in addition to submitting information about one of the partners of the business or a registered agent of the business.
To apply for a tax ID number, you will send in an online application. This online application will be processed in about an hour. You’ll be returned a tax ID number which you can immediately begin to use.
Depending on the method that you use to obtain a tax ID number for your partnership, it can take anywhere from an hour to six weeks. That’s quite the disparity, but only because it differs so significantly by method.
Applying for a tax ID number online will mean that you will receive it within sixty minutes. Applying for a tax ID number through fax will give you a tax ID number within five business days, while applying for a tax ID number through the mail will deliver a tax ID number within six weeks.
If you don’t need a tax ID number immediately, you can always apply through fax or through the mail. However ,there aren’t any real advantages to applying in this way. The online method is more convenient, faster, and just as safe.
An EIN number is used for many things:
- To identify you to the federal government. When you pay taxes for your partnership, you will use your EIN Number. Since you are a partnership and not a sole proprietorship, you are a separate legal entity that requires a separate EIN.
- To hire employees. To hire employees as well as to pay payroll taxes, you need an Employer Identification Number, which is the same as a Tax ID Number.
- To get employer-sponsored retirement plans. If you want to set up a 401k for partners or for employees, you will need to have an EIN number. This is also necessary for a solo 401k.
- To get permits and licenses from the government. Most permits and licenses are going to use your EIN number as an identifying factor, to determine whether your business qualifies for a permit or license.
- To open business bank accounts and get business loans. Businesses use EIN numbers like social security numbers; they’re used to determine your creditworthiness and your banking history.
These aren’t all of the things an EIN Number is used for, just a few of them. Just like a SSN number is used by many entities, a tax ID number is also used by many entities. It’s always better to have one and not need one than to need one and not have one.
Are you ready to get an EIN Number? You can acquire an EIN Number through a simple, online EIN application. From there, your partnership can immediately begin to use it.