Before you register an LLC and start operating in the state, you will need to figure out if you need a New Jersey EIN, how you should get one, and what role it serves. We have covered this in length in this article to help you with this stage of starting a business in New Jersey.
What is the Employer Identification Number (EIN)?
An EIN is a unique nine-digit number used by the US Internal Revenue Service (IRS) to identify your business for tax purposes which you will include in your paperwork to the authorities as you file business tax returns. A New Jersey state tax ID number comes in handy in protecting your identity as an individual. Thus, people can use it to protect the owner’s social security number (SSN). Please note that it can apply to you even if you do not hire employees, which can be confusing to business owners.
You may have heard of it in other terms such as:
- EIN Number;
- Employer ID Number;
- Employer Identification Number;
- Federal Employer ID Number;
- Federal Employer Identification Number;
- FEIN;
- Federal Tax Number;
- Federal Tax ID Number;
- Federal Tax Identification Number.
Is an EIN the same as a tax ID number?
While these terms are often used interchangeably when registering an EIN, it can be confusing to figure out exactly what you need. Here’s what you should know. The EIN is essential to the federal government as it helps in reporting income. Tax IDs, of which an EIN is one, also come about on the state level. For example, if you will deal with products and services subject to sales tax, you will apply for a tax ID number to help you collect these amounts on behalf of the authorities. It is one example of New Jersey tax numbers.
Thus, the two terms have a relation and can be used in place of each other in some circumstances. However, they are not exactly the same for a business in New Jersey.
Who needs an EIN?
Not everyone has to have an ID. You will need one if:
- You own the company with other people and are thus not operating a single-member LLC.
- You own the company alone or with other people and would like to hire people to serve the organization.
If you fall into any or both of these categories, you do not have much choice in the matter as it’s needed for New Jersey businesses of your type. You must get one to operate per the law. If you do not fall into any of these categories, you can make do without one. However, the benefits of having one might change your mind and you may realize you are better off with one anyway.
Benefits of having an EIN for your New Jersey LLC
Why should you bother with getting an ID? Is it that important? Yes! It comes with the advantages of:
- Completing your registration to operate in New Jersey: Once you have formally submitted your business details to the state, there’s a lot you still have to do. Part of this includes ensuring you are on good terms with the state and the federal government. Getting an EIN for a New Jersey LLC is just part of the process.
- Opening a bank account: You will realize that once you want to open a business account, banks will want to see the NJ Business Registration Application and ID paperwork. Otherwise, they will be reluctant in opening an account in your name. Please note that without a separate LLC business bank account, you will run the risk of piercing your corporate veil and losing your individual assets.
- Paying your employees: It will be much easier to prepare your employee payroll once you have your paperwork in order. The government can track how much you have paid each person and follow up on whether they paid the required taxes. Otherwise, you would be standing in the way of the law.
- Handling your finances: You can see what’s come in, gone out and how much you have paid to the government. It also becomes easier to file your returns by including your ID, making it more manageable to track what you’ve paid.
- Accessing loans: It might not look like it at this point but you will have much more access to credit lines and business loans once you have your account running.
- Applying for permits: The next part of your registration includes getting business licenses. Government authorities will request that you show an ID to help with tracking the paperwork. Without one, you will experience a lot of reluctance from the people handling your requests.
How to Get an EIN Number in New Jersey: Application
Please note that you should ensure that you have the go-ahead to run your business in the state. If you have not received official communication from the state about the success of your registration, please hold off on making a tax ID application. It can still go through but if you get your business registration rejected, you will have an ID that’s not tied to any business. You might want to get this part out of the way fast but not following the protocol can work against you.
Once you have your paperwork in order, you will need to include the following information when applying for an NJ EIN:
- The name of the business- please note that this should match what’s in your legal paperwork;
- Where you operate your business- it is not necessarily where the authorities can reach you.;
- The name of the owners or managers and their contact details;
- What kind of business you will be doing and the types of activities in which you will engage;
- When you started a business or when you formally registered your operations;
- When your accounting year ends;
- If you plan to hire employees and how many they will be;
- Contact details where the authorities can reach you when need be.
You will notice that you will already have come across most of these details when initially filing your registration to start doing business in New Jersey. It’s pretty much duplicating this information and submitting it via:
Online
If you want to get the processes finished in the snap of a finger, your best bet lies in filing online. By the end of the last stage, you will have gotten your approval and employer identification number and you can start using it immediately. You will later get a confirmation letter. The portal opens from seven in the morning to ten at night from Monday to Friday EST. Please note that if you have used this method in the past, you cannot use it again. Instead, you would use:
When filing, you can choose to go the postal route and fill your Form SS-4 as you would back in the day. Be warned, though, that it takes up to four weeks to get your response. For people who have other things to cater to during this period and time is not of the essence, you can use this option. Make sure you send the complete form to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Fax
Finally, you have this option which is much faster than snail mail. In about four business days, you should have your ID and should be well on your way to running a successful business. All you need is a complete Form SS-4 which you should address to (855) 641-6935.
In all these cases, you will not have to pay a dime as the EIN application is completely free. As long as you include the correct details and follow the proper channels, there’s no reason why you should not be set up in a matter of weeks!