One of several steps most businesses will need to take when starting a business in Massachusetts is to register for an Employer Identification Number (EIN) and Massachusetts state tax ID numbers. These numbers are most commonly used to register a business with the federal and state government in order to pay sales taxes, payroll taxes, and withhold taxes from employee wages.
Let’s review in more detail what this number is used for when it is required, the cost, and how to register.
Also See: Guide to Starting a Business in Massachusetts
What is the Employer Identification Number (EIN)?
EIN is short for Employer Identification Number and is sometimes referred to as a Federal Employer Identification Number, FEIN, Federal Tax Identification Number, or Federal Tax ID Number. This is a unique nine-digit number that is similar to a social security number for an individual but instead identifies a business.
The EIN is primarily needed to hire employees, as the EIN is used as the account for paying payroll taxes, income tax withholdings, and unemployment taxes.
Some other uses of the EIN include:
- Opening a bank account – Banks need an EIN (or SSN if the EIN isn’t needed) before opening a business bank account.
- Applying for business licenses & permits – Most Massachusetts business licenses and permits will require the EIN (or SSN in some cases) before applying.
- Filing tax returns – To file state and federal tax returns, the EIN is used to identify the business.
Who needs an EIN?
The EIN is needed for Massachusetts businesses that are either:
- Registered as a partnership, corporation, or multi-member Limited Liability Company, or;
- A sole proprietorship or single-member LLC that has employees
The EIN is optional for sole proprietorships and single-member LLCs without employees. Those business entities will use the owner’s social security number (SSN) or Individual Taxpayer Identification Number (ITIN). While it’s not required, using an EIN in place of the owner’s SSN can help protect the owner from identity theft.
Related: How to register for an EIN without an SSN
How to apply for an EIN
The easiest and fastest way to apply for an EIN is to visit the Internal Revenue Service (IRS) website, between the hours of 7 am – 10 pm EST, Monday – Friday.
The online application process only takes about 5 minutes to file the EIN online, and the number will be ready in seconds. If applying online isn’t an option, you can also complete an EIN application by mail or fax by sending Form SS-4 to the IRS fax number 855-641-6935.
You can even get an EIN over the phone if the company was formed outside the U.S. by calling 267-941-1099. If filing by phone, note that it isn’t a toll-free number.
There is no cost to apply for an EIN.
See how to register an EIN in this video:If you prefer to have some guidance in applying for an EIN, companies like IncFile or ZenBusiness can quickly take care of the registration.
What Information Do I Need to Get an Employer Identification Number?
Applying for an EIN is pretty straightforward, but you will need to obtain some information beforehand, such as:
- Legal name of the business
- Business address
- Name(s) of the principal officer, manager, or owner
- Name(s) and contact information of the owners, directors, officers, or members
- Type of business and what activities the business performs
- Date the business was started or acquired
- Closing month of the entity’s accounting year
- Number of employees expected to be hired
- Contact information
Within seconds, the IRS will provide the EIN that can be used immediately. A few weeks later, the IRS will send the official paperwork, known as an EIN Confirmation Letter (CP 575).
Is an EIN the same as a tax ID number?
In addition to registering the EIN, many businesses will also need to get state of Massachusetts tax numbers in order to pay for a variety of state business taxes.
Business tax numbers in Massachusetts are often confused with the Employer Identification Number. The EIN is a separate number that is used to federally register a business with the Internal Revenue Service (IRS) and may be needed in addition to state tax numbers. The most common reasons a business in Massachusetts will need to register for a state business tax numbers include:
- Sales Tax – Businesses selling products and certain services are required to collect sales taxes and will need to register with the Massachusetts Department of Revenue. Learn more about registering for a Massachusetts sales tax number.
- Employees – Businesses hiring employees will need to register with the Massachusetts Department of Revenue to get an Employer Account Number and the Massachusetts Department of Unemployment Assistance to get an Unemployment Insurance Number. Learn more about registering as an employer in Massachusetts.
How much does it cost to get an EIN in Massachusetts?
There is no cost for an EIN when you apply directly through the Internal Revenue Service.
Should I get an EIN or LLC first?
Be sure to register your LLC or Corporation before registering for an EIN. You should wait until the name of the entity is confirmed with the Secretary of the Commonwealth of Massachusetts before registering the EIN.