In this article, you will learn:
Shopify store owners are at times unsure whether they need a Taxpayer ID number (TIN) or an Employer Identification Number (EIN) for their Shopify businesses. A TIN number is an identification number that the Internal Revenue Service (IRS) uses for the administration of tax laws in the US.
EIN is one of the TIN Numbers that is issued either by the IRS for businesses and other organizations or by the Social Security Administration (SSA) for individuals which must be furnished on tax returns, statements, and other tax-related documents.
For instance, IRS issues EIN to businesses and non-profit organizations. Whereas, the SSA issues EIN to businesses and non-profit organizations.
The IRS uses the TIN or the EIN number to identify taxpayers who are required to file various business tax returns. Not all Shopify business owners are required to apply for an employer ID number. There are certain conditions that Shopify business owners must comply with which obligate them to have an EIN.
In this article, we will answer the query, “Do you need an EIN for Shopify”? We will also let you know how to add EIN in Shopify and how to apply for an EIN number.
What is an EIN Number?
As mentioned earlier, EIN stands for Employer Identification Number. It is also known as Federal Tax Identification Number and is used to identify a business entity, that is, the tax accounts of employers and certain others who have no employees.
EIN is a 9-digit number issued by the IRS to businesses and non-profit organizations. The IRS uses EIN to identify taxpayers who are required to file various business tax returns. The entities that use EIN include employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities.
Note that all the above-mentioned entities must use their EIN on all of the documents they send to the IRS and SSA. Also, every tax-filing entity must have only one EIN for the same business entity.
Further, a tax-filing entity must use EIN in connection with their business activities only. They should not use their EIN in place of their Social Security Number (SSN). Note that Social Security Number is a nine-digit tax identification number issued by SSA to individual taxpayers in the US.
What Is An EIN Number Used For?
The Employer Identification Number is used for the purpose of tax administration only and is not intended for use for any other activities including lotteries, tax lien auction or sales, etc.
Besides using EIN for tax purposes, you may also use EIN for banking, getting credit cards, taking loans, applying for business permits and business licenses, and contracts.
Do You Need An EIN For Shopify?
As a Shopify business owner, you may be wondering does my Shopify business need an EIN. Well, yes you need an EIN for your Shopify business to file tax returns and to hire employees.
Shopify business owners can file their taxes using either Social Security Number (SSN) or Employer Identification Number (EIN) depending upon the type of business structure they have and certain other conditions. This means not all Shopify business owners are required to apply for an EIN Number.
The following are the conditions that Shopify Business Owners must satisfy in order to apply for an EIN. Their Shopify businesses:
- Are either a corporation, partnership, or limited liability company
- Have employees
- Are required to file employment tax returns
- Withhold taxes on income other than wages paid to a non-resident alien
- Are involved with operating a trust or a non-profit or one of the other types of organization that the IRS has identified as needing to file with an EIN
In case Shopify businesses do not satisfy any of the above conditions, they can operate as sole proprietorship businesses. In such a case, the sole proprietors would use an SSN number instead of an EIN Number to file taxes.
Said this, there are a host of reasons why Shopify business owners may want to apply for an EIN. An EIN number gives Shopify businesses an identity. Such businesses can use EIN to open a business bank account or to apply for credit. They may also use EIN to apply for certain permits and licenses.
Moreover, having a Tax ID number separate from the SSN number helps Shopify business owners to use different identification numbers for business and personal finances and taxes.
Do you Need SSN For Shopify?
As mentioned earlier, IRS issues Taxpayer Identification Numbers (TINs) for processing taxes regardless of the immigration status of the taxpayers. That’s because both US citizens and noncitizens may have a tax filing or reporting requirement under the Internal Revenue Code.
SSN is a type of taxpayer identification number that the Social Security Administration (SSA) issues to individuals who are employed in the U.S. to file an income tax return. That is, individuals who are employed and receive wages in the US must have an SSN.
Put simply, every employer in the US who sets up payroll and pays wages to employees must request SSNs from their employees and report their wages using the SSN number.
The individuals can also use the SSN to open interest-bearing bank accounts with certain banks and conduct business in the U.S.
Thus, the purpose for which SSN was used initially was to keep track of the earnings history of U.S. workers for Social Security entitlement and benefit computation purposes. However, over time, government agencies started using SSNs to identify individuals. Besides this, even the private industry started using SSNs to track an individual’s financial history.
Thus, if you are running your Shopify business as a sole proprietor, you need to use SSN instead of an EIN to file and pay taxes. Only in certain circumstances, wherein you hire employees, would you have to use EIN or apply for one in case you don’t have one.
To apply for an SSN Number, you must complete Form SS-5 and provide at least two documents to prove your age, identity, and US citizenship or work-authorized immigration status.
Where Do I Put My EIN Number On Shopify?
As a Shopify business owner, you may want to know how to add EIN to Shopify. If you use Shopify Payments, then you need to add EIN in ‘Shopify Payments’. To add or update the EIN Number in your ‘Shopify Payments’, follow the steps below:
Step 1: Select Payments
The first step in adding EIN in Shopify is to login into your Shopify account. Once you are logged in, you need to go to the ‘Settings’ section which is in the bottom left corner of your Shopify account. After selecting the ‘settings’ button, you need to select ‘Payments’.
Step 2: Select Shopify Payments
1. In Case You Want To Add EIN When Setting Up Shopify Payments
- Once you select ‘Payments’, then you need to add a payment method. Shopify provides a host of payment methods provided by third-party payment providers to process your transactions. You can either any of Shopify-supported third-party payment providers or you can choose Shopify Payments to process your transactions.
- In case you choose ‘Shopify Payments’, the ‘Shopify Payments’ page will get displayed. On that page, you need to enter details like your ‘Business Type’, ‘Business Number (EIN)’, ‘Business Address’, ‘City’, ‘Postal Code’, and ‘Province’.
- Once you add all the details, click on the ‘Save’ button which is on the extreme right at the top corner.
Note that the EIN number is a Federal Tax Identification Number and is separate from your Sales Tax Identification Number. Some States may use the EIN as the State Tax Identification Number. Whereas, some other states may use a separate Sales Tax Identification Number for filing and paying State Sales Tax. As a Shopify Business owner, you must check your State Tax Laws to know whether you need to use an EIN Number or a State Sales Tax Identification Number,
Besides the EIN details, you also need to add your ‘Personal Details’ and ‘Banking Information’. Note that if you are a Corporation, LLC, Partnership, or Non-Profit Organization, you need to provide your EIN number. Whereas, if you are a Sole proprietor, you need to give your SSN in place of the EIN Number.
2. In Case You Want To Update EIN
- If you have already set up ‘Shopify Payments’ as your payment method and did not add EIN while setting up, then to add EIN, all you need to do is select ‘Settings’ and then select ‘Payments’. Under ‘Payments’, click on the ‘Edit’ button in this section in ‘Shopify Payments’.
- After clicking on the ‘Edit’ button, you would notice that in the ‘Tax Details’ box, there’s a message that says ‘Your business details could not be verified’. To update this section with valid information, click ‘Update’ business details.
- Then, add your valid tax information in the Tax Details dialog box. After you have entered the details, click on the ‘Save’ button to update your details.
3. Add EIN in Taxes
- There’s another way you can add your EIN in Shopify. First, log in to your Shopify account and go to the “Settings” tab. After clicking the ‘Settings’ tab, select ‘Taxes’. Under the “Taxes” section, click on “Edit” to add your EIN.
- Then, enter your EIN in the appropriate field and click “Save”. This is how you will add EIN to your Shopify account.
How To Apply For EIN?
In this section, we are going to answer the question of how to get an EIN number as a Shopify business owner. Well, there are three ways . The most preferred method to apply for EIN is through the internet on the IRS website. The other ways through which you can apply for EIN include fax, mail, or telephone. Let’s discuss each of them one by one.
1. EIN Online Application
To apply for EIN online, all you need to do is answer the questions on the IRS portal. Besides this, you need to be eligible to apply online.
The following are the eligibility criteria to apply for EIN online:
- Your principal business is located in the United States or U.S. Territories.
- You have a valid Taxpayer Identification Number (SSN, ITIN, EIN).
- You are limited to one EIN per responsible party per day. Here the “responsible party” fees to the individual who owns or controls the entity or who exercises ultimate effective control over the entity. Further, the responsible party must be an individual, not an entity, unless the applicant is a government entity.
- Further, while filing for EIN online, the applicants must remember that they need to complete their application in one session. That’s because they will not be allowed to save their application and return at a later time. Note that the session will get expired after 15 minutes. Once the session expires, the applicants will have to start filing the EIN application all over again.
The applicants must also remember that they will receive their EIN numbers only when the IRS completes their EIN verification process.
To start filing the EIN application, the applicants must click on the Start Application button. Then they may come across four sections. These include Identity, Authenticate, Addresses, Details, and finally EIN Confirmation section.
Under this section, the applicant must answer the following questions by selecting the option that is appropriate to their business:
a. What type of legal structure is applying for EIN?
- Sole Proprietor
- Limited Liability Company (LLC)
- View additional types including tax-exempt and government organizations
b. Why is the legal structure requesting an EIN?
- Started a new business
- Hired employees
- Banking purposes
- Changed type of organization
- Purchased active business
Under this section, the applicant must provide personal details for authentication. The following are the questions that the applicant may have to answer.
a. Who is the Responsible Party for the Organization?
- Existing Business
b. Please tell us about the Responsible Party.
Under this section, the applicants need to fill in their details like their first name, middle name, last name, suffix, SSN/TIN, and whether they are the responsible party themselves or a thyroid party applying on behalf of the responsible party.
In this section, the applicants need to provide their business address as well as their mailing address in case the business address is different from the mailing address. The details that the applicants may have to provide in this section include the street, city, US State or territory, ZIP code, phone number, and the specific person or department to whom the mail must direct.
Under this section, the applicants must mention the details related to the organization. These details include the legal name of the organization, trade name or DBA of the organization, county where the organization is located, state/territory where the organization is located, and the date when the organization started or was set up.
Apart from providing the above-mentioned details, the applicants must also answer questions like whether the organization needs to file Form 720; is into manufacturing alcohol, tobacco, or firearms; have employees receiving W-2 Form in the next 12 months; owns a highway motor vehicle with a taxable gross weight of 55,000 pounds or more; or whether the organization is involved into gambling or wagering.
Besides answering questions, the organization also needs to provide details regarding the industry that describes the business that the organization is into. There are a host of options from which the applicants needs to choose the most appropriate one.
5. EIN Confirmation
This is the last section of the online EIN application. Here, you need to provide the method through which you want to receive the confirmation letter for your EIN application. There are two ways in which you can receive the confirmation letter. One is through mail and the other is online. Choose the option that suits the best for your organization.
Note that the IRS will validate your details during the online session itself and issue the EIN immediately. Also, the applicants must remember that only those who have their principal business, office or agency, or legal residence in the United States or U.S. Territories can apply for EIN online. Further, the principal officer, general partner, grantor, owner, trustor, etc. must have a valid Taxpayer Identification Number (SSN, EIN, or ITIN) in order to use the online application.
2. EIN Application by Fax
To apply for EIN through fax, the applicants must complete Form SS-4 and send it via fax to the appropriate Fax Number. Click here to know the fax number where the applicants need to send their Form SS-4. If the applicants have provided their fax number, a fax will be sent back with the EIN within four (4) business days.
3. EIN Application by Mail
To apply for EIN through the mail, the applicants must complete Form SS-4 and send it through mail to the appropriate mail address. Click here to know the mail address where the applicants need to send their Form SS-4. Note that the IRS will take 4 weeks to process the EIN application form. Applicants need to ensure that Form SS-4 contains all of the required information.
4. EIN Application by Telephone
To obtain EIN, international applicants must call 267-941-1099 (not a toll-free number) between 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday. Note that the individual making the call must be authorized to receive the EIN and answer questions concerning Form SS-4.
In case the taxpayer authorizes a third party to make the call on behalf of the taxpayer, receive the entity’s EIN and answer questions about the completion of Form SS-4, then such a party must complete the Third Party Designee section. Once the designee receives the EIN, his or her authority gets terminated. Also, for the authorization given to the designee to be valid, the taxpayer must complete the signature area.
How Long Will It Take To Get an EIN?
The applicants must apply for EIN early enough so that they can get their EINs when they file their tax returns or make a deposit.
As mentioned before, the most preferred way to apply for EIN is through an online application. That’s because the IRS validates the applicant’s details during the online session itself and issues the EIN immediately. But the applicants must be eligible to apply for EIN through online application. Check the ‘How to Apply For EIN’ section to know the eligibility criteria.
In case the applicants are international applicants, they must call 267-941-1099 (Not a toll-free number).
Applicants can also obtain EIN through fax by sending a completed SS-4 Form via fax to the service center for their state. The state service center authority will respond with a return fax in about one week. In case the applicants fail to provide their fax numbers, the authority might take about two weeks to respond.
Finally, if the applicants apply for EIN through the mail, they may send their completed SS-4 applications at least four to five weeks before filing their tax returns or making a deposit.
In case, the taxpayers do not have their EIN when filing their tax returns or when their tax returns are due, they must write “Applied for” in their returns along with the date when they applied for their EIN within the space shown for the number.
Further, if the taxpayers do not have their EIN by the time a deposit is due, they need to send their payment to the service center address for their state.
Plus, taxpayers need to ensure that they make their check or money order payable to Internal Revenue Service (IRS). Further, they also need to make sure that they show their name, address, kind of tax, the period covered, and the date they applied for their EIN.
Do I Need An EIN For My LLC?
If you are an LLC, you must obtain an EIN number. To know more, read our article on Shopify LLC: Do You Need An LLC For Shopify?
Free EIN Lookup: How Do I Find My EIN Online?
The following are the ways in which you can find your EIN online:
- You can look for the computer-generated notice that the IRS issued when you applied for your EIN. The notice is nothing but the confirmation of your application for and receipt of an EIN.
- You can contact the bank with which you opened a bank account in order to secure your EIN. You can also contact the agency you got in touch with when applying for any type of state or local license.
- Besides this, you can also search for an old tax return you filed for your existing entity as it may have your EIN number notated.
- Lastly, you can contact the Business & Specialty Tax Line of the IRS at 800-829-4933 between 7:00 a.m. to 7:00 p.m. local time, Monday through Friday. Once you call, the assistor will request for information for the authentication of your identity and provide you with the EIN number over the telephone. Provided you are authorized to receive it. Individuals who are authorized include but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.