What is an EIN?
The Internal Revenue Service (IRS) assigns Employer Identification Numbers (EINs), which are distinct nine-digit numbers to business entities for taxation purposes. Employers rely heavily on this number, which is formatted as XX-XXXXXXX, as a useful tool for filing taxes.
An EIN guarantees compliance with federal tax rules and expedites the identification procedure for businesses. To operate lawfully in the United States, all businesses must obtain an EIN in order to conduct business. By taking this action, the federal tax system’s accounting for firms is guaranteed.
Sometimes, the terms “Tax Identification Number” (TIN) and “EIN” are used interchangeably. TIN, on the other hand, is a more general phrase that includes any identifier that the IRS uses to follow tax returns. An example of a TIN is the Social Security Number (SSN), which is also applicable to individuals as opposed to businesses. On the other hand, an EIN is a particular kind of TIN reserved for companies.
💡 Related Blog: How to Lookup a Company’s EIN Number
Why do companies need to verify a business’s EIN number?
When onboarding a new company as a client or partner, businesses in various sectors are required to follow “Know Your Business” (KYB) processes. In this step, the legality of the company and its proprietors are confirmed, and any possible hazards related to the partnership are evaluated.
A valid EIN is necessary for a business operating in the United States to conduct certain financial and insurance-related operations as well as for lawful operation. As a result, proving the identification of the company requires first confirming the EIN.
Making sure the EIN is legitimate and accurately linked to the firm in question is part of this process. In order to minimize potential hazards and legal responsibilities, the company might want to reevaluate the collaboration if the EINs do not match.
How to Verify an EIN number for a business?
1. IRS Website
An important and reliable source for free EIN numbers is the Internal Revenue Service (IRS). The IRS offers a specific page on its official website where anyone may look up an organization’s EIN by using its name or other identifying information. The IRS Tax Exempt Organizations database is another resource you may use to confirm the EIN of a charity or nonprofit organization you’re studying.This is a vital tool for confirming the authenticity of a company or making sure your own EIN registration is correct.
2. SEC’s EDGAR System
Using the Securities and Exchange Commission’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system is an essential first step in confirming an EIN number. Any company that trades its shares on a stock market open to the public must register with the SEC, produce reports, and have its data available through EDGAR.
3. Business Credit Agency
Verifying an EIN through a leading credit rating agency is another effective method. Unlike personal credit scores, business credit information is more accessible, and major credit bureaus often offer business credit reports upon request. For looking up an EIN, business credit bureaus such as Experian and Dun & Bradstreet are also helpful tools. These bureaus keep extensive databases of financial information, industry classifications, and EINs, among other business-related data.
Through a firm name search on their websites, consumers can obtain comprehensive profiles containing the EIN and other essential data required for validation.However, different authorities may not always have access to EINs and tax-related information.
4. State Databases
Apart from federal resources such as the IRS website, several state departments of revenue have their own online platforms for conducting EIN number searches. These websites typically feature a search tool where users can enter the company’s name or other relevant information to find its EIN.
It’s important to recognize that while the IRS issues EINs, state revenue departments may also issue state-specific identification numbers under certain circumstances. These state-level resources provide additional avenues for verifying business identities and ensuring compliance with local tax regulations.
5. Online Business Directories
Several online business directories provide convenient access to company profiles containing EIN numbers at no cost. Platforms such as Yellow Pages, Manta, and Yelp enable users to search for businesses by name or category, offering detailed information about each company, including its tax identification number. These directories serve not only as resources for verifying EINs but also for gaining valuable insights into a company’s offerings, customer reviews, and contact information.
6. Online legal and Business Service Provider
Various online legal and business service providers include EIN number lookup tools as part of their comprehensive services. Websites such as LegalZoom, Rocket Lawyer, and Incfile not only assist with business formation and compliance but also enable users to search for EINs by entering the company’s name or relevant details. These platforms offer valuable resources for those seeking assistance with legal documentation, business registration, and other related services.
7. EIN Verification APIs like Signzy
Signzy’s EIN Verification API is a powerful tool that enables businesses to verify the authenticity of an Employer Identification Number (EIN). By integrating this API into their systems, you can mitigate risks associated with fraudulent activities and ensure they are dealing with legitimate entities. This verification process can significantly enhance trust and confidence in business transactions.
All in all, Verifying an EIN is vital for businesses to confirm the legitimacy of potential partners, comply with regulatory requirements, and ensure accurate financial transactions. From utilising federal resources like the IRS website to leveraging state databases, business credit agencies, online directories, and legal service providers, there are multiple avenues available to verify EINs effectively.
By verifying EINs through these methods, businesses can mitigate risks, maintain regulatory compliance, and establish secure partnerships in their operations.
