eMinutes Blog

Why We Need to File Articles of Incorporation before Obtaining an EIN

May 16, 2017

Our firm obtains hundreds of Employer Identification Numbers (EINs) from the Internal Revenue Service every month when forming companies for our clients. As part of our process, we file articles of incorporation with the secretary of state’s office, then obtain the EIN from the IRS. Even though we are usually able to quickly obtain the EINs completely through the IRS’s online process, there is occasionally a delay. That sometimes leads to questions from clients who are anxious to open bank accounts and set up their accounting as to whether they can just jump online and get the EINs even before we have filed articles of incorporation for them. The answer is “no,” and here’s why.

The Form SS-4 Application for Employer Identification Number requires the applicant to provide the “legal name of the entity” for which the EIN is being requested “exactly as it appears on the … charter or other applicable legal document.”[1] As such, the company must have its “charter,” that is, its articles of incorporation, in hand to apply for an EIN from the IRS. But does it really hurt anything to jump the gun a little bit and apply for an EIN before articles of incorporation are filed by the secretary of state? There are two problems with doing so.

First, obtaining what you think will be the legal name of your company from the state does not happen immediately and it is not a given. In California, for example, once you have chosen a name for your company, you should file a certificate that reserves the name for 60 days.[2] You then submit for filing articles of incorporation setting forth the name of the corporation, among other things.[3] But reserving the name in advance is not a guarantee that the secretary of state’s office will accept the name. The secretary of state will not file articles that set forth a name that is likely to mislead the public or that is the same as, or resembles so closely as to tend to deceive, the name of another domestic corporation or a foreign corporation that is authorized to transact business in California.[4] Therefore, until the secretary of state actually files the articles of incorporation, you can’t be sure when completing the Form SS-4 that the name you chose and reserved will be accepted as the “legal name of the entity” as it appears on the articles.[5]

Second, on January 1, 2014, the IRS changed its process to obtain EINs. The online application process is still the IRS’s preferred method for customers to apply for and obtain an EIN, and we always start the process by applying online. But about 10-20% of the time that we fill out an online application, the IRS requires that we fax them the completed Form SS-4 for verification, along with a copy of the applicant’s articles of incorporation.[6] In those instances, which we deal with more than a dozen times every month given the number of corporations we form, we simply must have a filed copy of the articles of incorporation to fax to the IRS before we can obtain an EIN. Once we fax the Form SS-4 and the articles to the IRS, they will typically issue the EIN in about seven business days, which explains the delay in getting the EIN to our clients on occasion.

A similar scenario occurs in those cases where our clients jump the gun and submit a name to the IRS that does not match exactly what is on the articles of incorporation eventually filed by the secretary of state. In that event, the entity has to fax a letter to the IRS explaining the mistake, together with a copy of the entity’s articles issued by the secretary of state. The IRS will then reissue the EIN confirmation letter with the correct name. All in all, this is a hassle easily avoided simply by waiting until the articles are filed to apply for an EIN.

In sum, having the entity’s name officially determined by the state through the filing of articles of incorporation is both a practical and a legal requirement for obtaining an EIN. And that is why we file articles with the state before obtaining an EIN from the IRS.

[1] IRS, Instructions for Form SS-4, Line 1. The applicant must also provide the entity’s trade name, or “doing business as” (DBA) name, if it has one different from “the legal name.” Id., Line 2.

[2] See Cal. Corp. Code § 201(d).

[3] See id. § 202(a).

[4] See id. § 201(b).

[5] See also id. § 200(c) (the corporation’s existence does not actually begin until the articles are filed). Notwithstanding that the secretary of state filed the articles, the corporation’s use of the name can still be enjoined if the name is determined by a court to be in violation of section 201(b). See id. § 201(c); Acad. of Motion Picture Arts & Scis. v. Benson, 15 Cal.2d 685, 691-92, 104 P.2d 650, 653 (1940) (in bank) (a court can restrain an unfair use of a corporate name by others if the names, though not identical, are sufficiently similar to cause confusion and injury). That remote possibility is not enough to hold up the process of applying for an EIN.

[6] Under state law, a copy of the corporation’s articles duly certified by the secretary of state is “conclusive evidence of the formation of the corporation and prima facie evidence of its corporate existence.” Cal. Corp. Code § 209.

Our attorneys are admitted to practice law in California, New York, and Texas.
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