The short of it is that an online business needs an EIN number because all businesses need one if they’re to comply with their duties of reporting their earnings and get evaluated for their tax liability. While it’s a bit of a stretch admittedly, I can see why the question would come up since an online business is indeed one which essentially exists on some web servers somewhere and not one which exists physically in the form of a brick and mortar structure.
Somehow the relative ease with which someone can start an online business and have it going from zero to profit within a very short space in time can breed the sentiment that it’s not a “real” business. It may be a business which is operating in the digital space, but it’s still a business which is involved in taxable income generation processes regardless of the fact that it’s digital.
If however we are indeed to get technical about it, indicatively the location of the servers on which the digital infrastructure for the business is hosted makes for the location of your business itself. That’s only the case if you’re merely running something like an e-commerce store or the most basic of websites over which you sell a product or service and accept payment for it. But that payment also needs to be secure because online frauds have been quite prevalent in recent years. Admittedly, businesses that provide specific products and services, including online businesses, are regarded as high-risk merchants by many merchant processing service providers. Whether or not you are running an e-commerce store, you might want to look at the websites like https://www.easypaydirect.com/, which offer a wide range of payment processing services, including high-risk payment processing. Anyway, talking about the location, what could be your off-shore location in this instance would then have to be put down as the physical address of your business, but that would just complicate things unnecessarily.
Just so that you make sure you’re on the safe side, your registered business address should have nothing in relation to the location of the servers on which the website is hosted, unless of course you’re hosting it in-house on your own servers.
So basically an online business most definitely needs an EIN number and applying for employer identification number isn’t all that complicated a process in itself. In fact, if you have the basic technical know-how to operate an online business of any kind, the process of applying for an EIN would be so easy for you that you could probably do it with your eyes closed. I mean simply filling out an online application form as part of a guided process every step of the way is a lot easier than logging into your cPanel (web hosting account) and going about all the technicalities of setting up your online business.
Even if you’re essentially running a one-man operation, you are the first and in this case the only employee of the online business, so your online business needs an EIN number.
The process itself is a very basic one which can be completed at GovDocFiling, starting the process of the requisite compliance. You’d best do it at your earliest convenience because you don’t want to find yourself in a situation that has you running around like a headless chicken, as your first and every other subsequent tax season draws nearer to a close and the deadline for the filing of your tax returns looms larger.