For any business operating in the United States, having proper identification is crucial. Among the essential identifiers are the Federal Employer Identification Number (EIN) and State Employer Identification Number (SEIN). While the EIN is obtained from the federal government, the SEIN is specific to each state. In this support article, we will explore the reasons why your business needs both a federal and state EIN and provide resource links where you can find the applications for an EIN.
Why You Need a Federal Employer Identification Number (EIN):
Tax Reporting and Compliance: The EIN serves as your business's tax identification number and is used for various federal tax purposes, including reporting income, employment taxes, and other business-related tax obligations.
Hiring Employees: If your business plans to hire employees, having an EIN is a requirement. It allows you to withhold payroll taxes, such as Social Security and Medicare, and report these taxes to the Internal Revenue Service (IRS).
Opening Business Bank Accounts: Most financial institutions require an EIN to open a business bank account. Separating personal and business finances is crucial for accurate record-keeping and simplifies tax preparation.
Why You Need a State Employer Identification Number (SEIN):
State Tax Obligations: State governments require businesses to report and pay various taxes, such as sales tax, income tax, and unemployment tax. A SEIN is essential for fulfilling these obligations and staying in compliance with state tax laws.
State-Specific Reporting: Depending on your business activities, you may need to file specific reports with state agencies. These reports may include information on employee wages, unemployment insurance, and worker's compensation. A SEIN is often necessary to complete these reports.
Unemployment Insurance: State unemployment insurance programs provide benefits to eligible employees who lose their jobs. To participate in these programs, businesses are required to contribute to the state unemployment insurance fund. Obtaining a SEIN enables you to fulfill this obligation.
Resource Links to Find the Application for EIN:
Internal Revenue Service (IRS) EIN Application: The official IRS website provides an online application for obtaining an EIN. Visit the IRS website at Apply for an Employer Identification Number (EIN) Online | Internal Revenue Service
State Government Websites: Each state has its own process and application for obtaining a SEIN. Visit your state's official website and search for "employer identification number" or "business registration" to find the relevant resources and application forms.
Find your state's website here.