Creating a business, filing the paperwork, and actually getting it up and running, is not a task for the faint of heart. There is a lot of research to be done and decisions to be made. After all of that hard work, sometimes the business just doesn’t work out. So what do you do, and what happens to your EIN or Employer Identification Number? Cancelling an EIN is a fairly simple process, but there are specific steps that need to be taken to cancel your EIN correctly.
“Cancel” Your EIN
The thing to remember is your EIN number is sort of like a social security number. It is issued by the government and is associated with you being from birth through death. The same is true about your company’s EIN. Once the IRS has issued an EIN to a business it will not be reused and reissued to another business, ever. So, really, you cannot ever “cancel” your EIN. What you do is, if you no longer need the number for whatever reason, you have to close the account you opened with the IRS, and that will essentially “cancel” that EIN from further use.
Before you close or “cancel” your EIN number, you need to make sure you file your tax returns on that business. You are required to pay any taxes that you are responsible for even if it has not been a completed tax year. Taxes may include any income tax based on your business structure, any payroll taxes, and any other taxes associated with your employees such as unemployment and workers compensation.
To cancel your EIN with the IRS and close that account, you have to notify the IRS by letting them know the reason you are closing the account as well as the legal name of the business, the address associated with the business, and, of course, the EIN. Remember, just because you close one account, doesn’t mean you cannot open another.