The Value of an Employer Identification Number

Do you have an EIN – an Employer Identification Number (Federal Tax Identification Number)?

If No, you should strongly consider getting one as it replaces the need to share your social security number.

Through the EIN you are registering your business with the federal government, so your EIN works in place of your social security number for business related items (ie. set up a bank account, apply for loans, and paying taxes).

This is a free service offered by the Internal Revenue Service and you can get your EIN immediately. Beware of websites on the Internet that charge for this free service.

You may apply for an EIN in various ways.  You will need Form SS-4 PDF for fax or mail in.

  • You get your EIN immediately by applying online (the preferred method). The information is validated during the online session, and an EIN is issued immediately. The online application process is available for all individuals whose principal business, office or agency, or legal residence, is located in the United States or U.S. Territories.
  • You can fax a completed Form SS-4 to the service center for your state, and they will respond with a return fax in about one week. If you do not include a return fax number, it will take about two weeks.
  • If you apply by mail, send your completed Form SS-4 to the address listed under service center, expect at least four to five weeks to receive your EIN.

Not sure if it’s worth your time, because you ‘ve been sharing your social security number with client families for years and haven’t had any problem. Or maybe you’re thinking “I’m going to be retiring shortly”. Here’s a recent event that has raised the value of having an EIN:

The Office of Child and Family Services recently shared contact information on licensed providers that were level 3 and 4 on Quality for ME with the Department of Education . This was done to support providers possibly working with local school district in offering distant learning within their programs. OCFS was made aware that for providers without an EIN their social security numbers were part of the information shared. The situation was immediate handled between OCFS and DOE, but this is a perfect example of the value of having an EIN.

But, I’m not a Quality for ME level 3 or 4, so the OCFS release didn’t impact me.

Legal guardians need an identification number from their family child care provider so they can claim their child care tax credit. Without an EIN you are providing your social security number. Do you really want families and whomever is doing their taxes to have your social security number?

Simple Fact: Having an EIN helps you avoid identity theft problems.

Once an EIN has been assigned, whether the EIN is ever used to file Federal tax returns, it is never reused or reassigned to another business entity. If you later determine you do not need the number, the IRS can close your business account after submission of the necessary paperwork.