What Is An IRS SS-4 Form And What's The Process?
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Many small business owners will at one point or another likely apply for business financing. There are several things you will need to present in tandem with the application. One such item that you want to make sure you have is your Employer Identification Number (EIN/). If you have not done so yet, obtaining an employer identification number is important for your business in terms of verification and tax purposes. And again, when applying for any sort of financing, you are going to need one. This is where the SS-4 form comes in. This is the form you're required to fill out to be issued an EIN. In this article, we look at what this process involves and why you should go ahead fill out an IRS SS-4 form, and thereby get an employer identification number.
Understanding the IRS Form SS-4
Again, if you do not already have an EIN, then you will need to complete an IRS SS-4 form to obtain your employer identification number. This is just a unique number given to business entities that are largely used come tax time—it represents your business tax ID number. Not all businesses require an EIN; however, if you have employees you will need an employer tax ID number to file your payroll taxes. Additionally, certain business entities require an EIN to file their annual business taxes.
If you are a sole proprietorship or are a single-person LLC and have no employees, then you are not required to get an EIN. You still can, however. It is often recommended that all businesses fill out an SS-4 form and get their EIN. This simply helps you to keep personal and business accounts separate. Not to mention, it is more efficient when it comes to building up your business credit and also as far as applying for business financing.
What is IRS Form SS-4?
You do have the option of filling out form SS-4 online. This is probably going to be the easiest and fastest way to get your EIN. It is one of the simpler IRS forms on their website and consequently should not take you very long. The SS-4 form asks for your business information, including the date the company started, type of entity, business name, and address, applicant's information, number of employees, industry, and types of products/services sold. As the owner of a small business, you can have someone apply for an EIN for you—this person needs to be someone that controls or manages the business's funds and assets.
When You Apply for Financing
Getting a small business loan can be a fairly involved process, depending on the lender of course. Most often the lender in question will ask you for your IRS SS-4 form. They are not however asking for your application; rather, upon receiving your official EIN, the IRS will send you a notice informing you of what your number is. The notice itself is called Form SS-4—so the confusion is understandable.
The reason a lender will ask for this is so that they can verify your business. Much like a social security number, an EIN, as noted, is unique to your business. No one else will have this same number. This, therefore, helps expedite the loan application process. Many might wonder why they can't verify your business's EIN via tax returns. Why go through the hassle of tracking down your SS-4 form? Largely this is because errors can occur. Let's say your accountant entered the EIN incorrectly on your returns for example. Consequently, the IRS may not notice this right away it could take months before they spot the error. This could then hold up the loan application process for quite a long time. The lender understands that it is much easier to deal directly with the IRS SS-4 form and thus have the information firsthand, error-free.
For Those Who May Not Have an SS-4 Form
Sole proprietors do not need an EIN to conduct business as they have no employees. And while many do opt to get one, some don't. If you are applying for business loan financing and don't happen to have an employer identification number because you're not required to have one, you don't necessarily need to go ahead and apply for one to pursue a business loan. That is to say, in that case, the lender will use your social security number for the loan and so the loan will then be in your name.
Any other type of business will need to have an EIN to apply for a commercial loan. You still in that case could be asked to offer a personal guarantee, however, they will use your EIN versus your social security number if you are not a sole proprietor or a single LLC with no employees.
Getting Your SS-4 Form Notice
First off, when the lender does ask for your IRS SS-4 notice, do you know where it is? Not everyone manages to keep the letter informing them of their EIN on file. You may be able to retrieve it online. If you did apply for the EIN online, the IRS notified you of that number via PDF. So check your hard drive.
If you cannot locate it, then you can always call the IRS and request they send another notice. You will call into their Business and Specialty Tax Line. They will ask you to provide some information to verify you are authorized to receive a new SS-4 Notice for the business. Once you receive the new notice in the mail, be sure to make a copy for the lender.
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