 Employer Identification Number
State Unemployment Insurance (SUI)
State Income Tax (SIT)
Your business startup checklist will include tasks such as making sure you have an Employer Identification Number (EIN), you become familiar with State Unemployment Insurance (SUI) and State Income Tax (SIT).
So, who needs an EIN? Glad you asked. The answer is you, if:
- you have employees;
- are a corporation or partnership;
- file any of these tax returns: Employment, Excise or Alcohol, Tobacco and Firearms;
- withhold taxes on income, other than wages, paid to a non-resident alien;
- have a Keogh plan, are involved in any of the following types of organizations: Trusts, except certain grantor-owner revocable trusts, IRAs, Exempt Organization Business Income Tax Returns; Estates; Real estate mortgage investment conduits; Non-profit organizations; Farmers' cooperatives, plan administrators.
While you're just getting started in your business, for future reference, realize that if your ownership or structure changes you will likely need a new EIN. For example, if you are currently a sole proprietorship and take in partners and operate as a partnership, if you are a corporation and receive a new charter from the secretary of state, or if you are a partnership and you incorporate, all of these would require you to get a new EIN.
However, not all changes lead to new EINs. If you simply change the name of your business or add new locations, for example, there would be no need to get a new EIN.
How to Apply
When it comes to running your business, few things will be as easy as getting an EIN. There are several ways you can get one. You can access Form SS-4 from this site or by calling, 800-TAX-FORM to get it by mail. Or to get a number immediately, call the Business & Specialty Tax Line at 800-829-4933. Someone will take your information, assign an EIN and provide the number to the authorized individual over the telephone. You can call Monday-Friday, 7 a.m. to 10 p.m. local time.
Keep in Mind
A 3rd Party designee must fill out the SEC. 6103(c) disclosure information at the bottom of the Form SS-4. It must also be signed by you for the 3rd Party designee authorization to be valid. The Form SS-4 must be mailed or faxed to the appropriate service center. A 3rd Party designee may call for an EIN. However, a faxed Form SS-4, with your signature, is still required. The IRS will take the information over the phone from the 3rd Party designee and ask the 3rd Party designee to fax the completed Form SS-4 to them. When the fax is received, the number will be assigned and faxed back to the 3rd Party designee or given over the phone. The 3rd Party designee's authority terminates at the time the EIN is assigned and released to the designee.
Realize that it is you, the employer who provides 100% of the funds required to finance Unemployment Insurance Benefits paid to claimants. Fortunately, you do have some "control" over the SUI tax. Unemployment insurance is the only controllable employer payroll tax. If an employer manages its Unemployment Program effectively (or employs a third-party administrator like ADP to do so), it can substantially control and reduce the amount of Unemployment Taxes it pays.
Don't be surprised if you're a bit confused about how your SUI Tax rate is established. Each state's employer SUI tax rate is calculated in a different (but similar) manner. The employer's "experience" (or history) is used to calculate the tax rate. The critical experience factors are payroll history (which indicates employee count and turnover) and Benefit charge history (which is a record of Unemployment Benefit Charges an employer has had to "pay" for ex-employee's Unemployment Claims.) The fewer claims an employer has experienced, the lower the SUI Tax Rate will be. The SUI Tax Rate is a percentage of "Taxable Payroll" (not total payroll).
If you want to find out the minimum and maximum SUI Tax Rate and state wage and tax profiles for all states, go to Employer Tax Obligation.
ADP keeps a close
watch on each state's initiatives and changes. You can
find out the latest information by visiting ADP
Tax & Financial Services. Also, learn how ADP can
help you reduce the burden of tax
and compliance management.
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The "New Business" section is not intended to replace
legal or accounting services. If legal, accounting, or other professional
assistance is required, the service of an attorney or certified public
accountant should be sought.
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