When you run an auto repair business, you need to know all about car maintenance, troubleshooting, and repairs, but you also have to wear multiple hats and manage the business aspects of your repair shop. One thing that most auto repair businesses need is an Employer Identification Number (EIN).
Although it’s called an “employer” number, an EIN is actually used in a variety of situations, and your business needs this federal tax ID number for multiple purposes. Keep reading to learn what you need to do to get an EIN for your auto repair business.
Does Your Auto Repair Business Need an EIN?
When does your auto repair business need an EIN? In some cases, you may be able to start your business without this number but only if you’re working alone and you don’t incorporate or do any banking. Ideally, you should get an EIN for your auto repair business as soon as possible, and you certainly need one as your business grows and expands.
In particular, you need an EIN if you want to hire employees. You cannot fill out their paperwork or submit their payroll taxes without an EIN. You don’t need an EIN to pay independent contractors unless they are foreign entities and you need to proactively withhold taxes. Whether you have employees or not, you need an EIN if you want to set up a pension plan affiliated with your auto repair business.
Typically, you also need an EIN if you plan to open a bank account or want to apply for a business loan. If you want to change the structure of your repair shop, you also need to obtain an EIN. For instance, if you want to incorporate a sole proprietorship, you need to get an EIN. Similarly, if you buy an existing auto repair business, you need to obtain a new EIN so that you are not using EIN obtained by the previous owner.
How to Get an EIN for an Auto Repair Business Online
Now that you know whether or not you need an EIN for your auto repair business, you can get ready to start the application process. If you have internet access, you can apply for your auto repair business EIN online. You just need to gather the information listed below and start the application.
Applying for an EIN online is the best option if you want to get your EIN quickly. Once you complete the application, you should receive your tax ID number that day or by the next business day. The only exceptions are in cases where the government requests additional information. After you get your EIN, you can use it immediately. You don’t have to wait.
How to Get an Auto Repair Business EIN Using Fax, Mail, or Phone
Applying for an EIN online is not the only option. You can also apply for an EIN for your auto repair business using a fax machine or through the mail. For both of these application methods, you need to obtain a printed copy of the EIN application. Then, you write your answers into the application and fax or mail it to the number or address on the form.
These application options take longer than applying for an EIN online. If you have a return fax number and you note it correctly on your application, you should get your auto repair business’s tax ID number within about four business days. Through the mail, you should allow four to six weeks for this process.
What Business Information Do You Need for EIN Applications?
When filling out an EIN application for your truck repair business, you need the following pieces of information:
- The legal name of the truck repair business
- The trade name of the truck repair business
- Your business address
- Type of business structure (sole proprietorship, partnership, corporation, non-profit, etc)
- Name of responsible party
- Responsible party’s tax identification number (Social Security Number or Individual Tax Identification Number)
- Whether or not you’ve ever received an EIN in the past
- Past EIN numbers
- Date business acquired
- Closing month of accounting year
- Principal activity of your business
- First date paid wages to employees
- Reason applying for an EIN
The responsible party needs to sign this application. Luckily, you can usually do an electronic signature with an online application so you don’t need to print or fax anything, but you need to ensure that the responsible party is present while you are completing the application.
What Does Responsible Party Mean on EIN Applications?
On an EIN application, you may notice that you can put in an EIN as the tax ID number for the responsible party. However, it’s important to note that this option is not available for truck repair businesses. It is only available to government entities. All other entities need to have an actual person as their responsible party. Government entities can have other types of entities as their responsible party, but your business needs to list the principal officer, a general partner, the owner, or a similar person as the responsible party.
Do You Need Employee Information on EIN Applications?
Because many businesses obtain this federal tax ID number when they hire their first employee, the EIN application requests a lot of information about employees. You only need to provide estimates. Your business is not obligated to the numbers you provide on this application. As needed, you can adjust the actual numbers on tax returns or other forms.
You need to provide the number of employees you have in agricultural, household, and other sectors. Then, you need to estimate if you plan to pay more than $1,000 in payroll tax throughout the year. Finally, you need to note the first date your business paid your employees wages or issued annuities to them. If you’re not sure of these details, your accountant or bookkeeper should be able to help you estimate the figures.