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A Federal Employer Identification Number (FEIN or EIN) is used to identify a business entity and is issued by the IRS. Because this is required to open a bank account and employ workers, it is typically essential for all businesses to obtain an EIN upon formation. A few years ago, the IRS changed its procedures around obtaining an EIN, making the process potentially more time consuming — particularly for those who file frequently, like major corporations and law firms.
One of the major changes the IRS made is that U.S. entities can no longer obtain an EIN over the phone. (International applicants still can apply by phone.) U.S. entities can only apply online, by fax, or by mail. This process can take anywhere from a minimum of four days (if applying by fax) to four weeks (if applying by mail) or longer if all of the required information is not provided. The online application process is the fastest. Once the application is completed and the information validated an EIN can be issued immediately.
Although it may seem like a fast and simple process this is not necessarily so, particularly for frequent applicants. First, only one Federal EIN can be obtained per responsible party per day. This means, for example, if a company wanted to form five entities it must apply once per day over five days. Second, while online applications tend to be quicker, they can only be done once per responsible party. Therefore, once a company has obtained an EIN for an entity through the IRS online portal, all EINs for subsequent entities they form must now be done via fax. This can take several days and requires significant time invested in follow-up.
Working around these hurdles and also tracking multiple EIN applications means that law firms and corporate paralegals spend a substantial amount of time focused on this process alone.Learn how CT’s document filing services can support all of your business formation needs including obtaining FEINs
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