Now it's easier to apply for an Employer Identification Number (EIN) from the IRS. First, the basics, then I'll tell you my experience in using this process.
The EIN is a business identification number, sort of like a Social Security number for a business. Any business which has employees must have an EIN, and most other businesses need one for other reasons. The IRS calls it a "tax administration" number.
Change in Process
The IRS has announced that it has eliminated the need to use Form SS-4, the paper application form for an Employer ID. The new process involves an online application questionnaire. After you complete the EIN application online, you will receive your EIN immediately upon verification. Some notes:
You can receive a confirmation online or by mail (which takes up to 4 weeks).
An individual may only apply for one EIN a day.
To use the online option, your business must be located within the U.S. or a U.S. territory.
The SS-4 (PDF) option is still available for those who don't want to apply online.
The Process - It Really is Easy
I applied for an EIN for a new LLC my husband is starting. At each step, there are selections to make and explanations and help topics if you have questions. For example, on the "Legal Structure" page, you see "What if I do not know what type of legal structure or organization to choose?". On the page describing different federal taxes, you can get help with the forms.
When you have completed the application, you can review the information. BUT, if something is incorrect, you cannot edit the information. You must begin a new application.
You do have to work through the list completely within a specific time, or you will be timed out. So...
You can use my article on How to Apply Online for an Employer ID Number to find out the questions and make notes before you begin. If you use this online form, let me know what you think.
A reader asked, "Do I need to file my business taxes on Schedule C if I just have a 1099-MISC and no other business income?"
How you report this income depends on whether you consider yourself to be self-employed; that is "in business," with business expenses. Just because you don't have a formal business structure (like a partnership or LLC), it doesn't mean you are self-employed.
If you consider yourself self-employed, report the income on Schedule C - Profit or Loss from Business.
If you don't consider yourself self-employed, how you report this income on your personal tax return depends on where it is located on the 1099-MISC form.
If the income is reported in Box 3, Other Income, include the information on this 1099-MISC on Line 21 "Other Income."
If your 1099-MISC income has been reported in Box 7, Non-employee income, also report this income on Line 21 of your personal tax return.
The IRS says:
If you are not an employee of the payer, and you are not in a self-employed trade or business, you should report the income on line 21 of Form 1040 and any expenses on Schedule A (Form 1040) (PDF), Itemized Deductions.
William Perez, at Tax Planning, suggests reporting 1099-MISC income on Schedule C. It's a good opportunity to review any possible business expenses that could reduce your tax bill, including a home office space deduction.
More detail from the IRS on how to report 1099-MISC income.
Robert Wood at Forbes reminds us that Form 1099-MISC isn't included with your tax return; keep the form in case you get audited.
Finally, don't forget that if you are self-employed, you must pay self-employment taxes (Social Security and Medicare taxes), based on the profit from your business. More on Self-employment and Self-employment taxes.