How to Get an EIN Number for Your Business

6 minute read

An Employer Identification Number (EIN) is a crucial step in establishing your business. Whether you plan to hire employees, open a business bank account, or simply file your taxes, an EIN is essential. This section will guide you through the process of obtaining an EIN, explain its importance, and detail how it can benefit your business.

What Is an EIN and Why It’s Important

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States. Think of it as your business’s Social Security number—a way to identify your business for tax purposes.

The Role of an EIN in Your Business

• Tax Identification: The primary purpose of an EIN is to identify your business for tax reporting. It’s required for filing business taxes, paying employees, and other IRS interactions.
• Legal Requirement: For most business entities, an EIN is legally required to operate, especially if you plan to hire employees, form a corporation or partnership, or open a business bank account.
• Separation of Personal and Business Finances: An EIN helps you keep your personal and business finances separate, which is crucial for liability protection and tax filing.

Who Needs an EIN?

Not all businesses are required to have an EIN, but many do. Here’s a breakdown of who needs one:

• Corporations and Partnerships: All corporations and partnerships, regardless of size, need an EIN.
• LLCs with Employees: If your LLC has employees or you choose to be taxed as a corporation, you’ll need an EIN.
• Sole Proprietorships with Employees: Sole proprietorships with employees are required to obtain an EIN. Even without employees, a sole proprietor may still benefit from having one.
• Nonprofits and Trusts: Nonprofit organizations, estates, and trusts are also required to have an EIN.
• Businesses Filing Excise Taxes: If your business is subject to certain excise taxes, an EIN is necessary.

For help deciding what business structure is right for you, check out Choosing Your Business Structure.

Step-by-Step Guide to Obtaining an EIN

Obtaining an EIN is a straightforward process, and it’s free. Here’s how to get your EIN, whether you’re applying online, by mail, fax, or phone.

Step 1: Determine Your Eligibility

Before applying, ensure that you meet the IRS’s eligibility requirements:

• Principal Business Location: Your principal business must be located within the United States or its territories.
• Responsible Party: You, as the business owner or another responsible party, must have a valid Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), or another valid taxpayer identification number.

Step 2: Gather the Necessary Information

To complete your EIN application, you’ll need the following information:

• Legal Name of the Entity: The full legal name of your business as it appears on your business registration documents.
• Trade Name (if applicable): If your business operates under a different name, you’ll need to include this as well.
• Responsible Party: The name and SSN or ITIN of the responsible party.
• Business Address: The physical address of your business.
• Type of Entity: You’ll need to specify your business structure (e.g., sole proprietorship, LLC, corporation).
• Reason for Applying: The IRS will ask why you’re applying for an EIN (e.g., starting a new business, hiring employees).

Step 3: Choose Your Application Method

The IRS offers several methods for applying for an EIN. Choose the one that best suits your needs:

• Online Application:
• Fastest Method: The online application process is the quickest and most convenient. You’ll receive your EIN immediately upon completion.
• Availability: The online application is available Monday through Friday, from 7 a.m. to 10 p.m. Eastern Time.
• Step-by-Step Guide: Visit the IRS website, complete the online form, and submit it. Ensure all information is accurate to avoid processing delays.
• Mail or Fax Application:
• Form SS-4: Download and complete Form SS-4, the IRS application for an EIN.
• Mailing Address: Send the completed form to the appropriate IRS address based on your location.
• Fax Option: For faster processing, you can fax the form to the IRS. You should receive your EIN within four business days.
• Phone Application:
• International Applicants: If you’re applying from outside the U.S., you can obtain your EIN by phone. Call the IRS at the designated number for international applicants.
• Verification: Have your completed Form SS-4 ready, as the IRS representative will ask for the same information.

Step 4: Receive and Store Your EIN

Once you’ve successfully applied, you’ll receive your EIN. Here’s what to do next:

• Immediate Receipt: If you applied online, your EIN is issued immediately. For mail or fax applications, you’ll receive your EIN via mail.
• Record Keeping: Store your EIN in a safe place. You’ll need it for future interactions with the IRS, banks, and other entities.
• Updating Your Records: If your business details change, update your EIN information with the IRS to avoid any discrepancies.

Uses of an EIN in Your Business

An EIN serves multiple purposes beyond just tax identification. Here’s how an EIN can benefit your business in various aspects:

Opening a Business Bank Account

• Banking Requirements: Most banks require an EIN to open a business bank account. This helps separate your personal and business finances, a critical step in protecting your personal assets.
• Building Business Credit: A business bank account is the first step in establishing business credit, which is separate from your personal credit.

Hiring Employees

• Payroll Taxes: If you have employees, an EIN is necessary for managing payroll taxes. The EIN is used when filing employee tax forms, such as W-2s.
• State Requirements: Some states require an EIN to file state employment taxes and to register with state agencies.

Filing Taxes and Tax Returns

• Federal Taxes: Your EIN is used to file federal tax returns, including income tax, employment tax, and excise tax.
• State and Local Taxes: Many states and localities also require your EIN for state and local tax filings.

Applying for Business Licenses and Permits

• Compliance: Certain licenses and permits require an EIN as part of the application process. This is common in regulated industries such as construction, hospitality, and healthcare.
• Verification: An EIN helps verify your business’s legitimacy when applying for local and state permits.

Protecting Your Personal Information

• Reducing Identity Theft Risk: By using your EIN instead of your SSN for business transactions, you reduce the risk of personal identity theft.
• Maintaining Privacy: Your EIN allows you to maintain a level of privacy in your business dealings, especially when dealing with vendors, clients, or government agencies.

Need more information on protecting your brand online, check out our lesson on Understanding Brand Protection.

What to Do if You Lose Your EIN

Losing your EIN can be problematic, but there are steps you can take to recover it:

Retrieving Your EIN

• IRS Assistance: If you’ve lost your EIN, you can contact the IRS Business & Specialty Tax Line for assistance. They will ask for verification information before providing your EIN.
• Check Old Documents: Your EIN may also be on previous tax returns, business bank account statements, or other official documents.
• Updating Records: Once you retrieve your EIN, update your records and store it securely to prevent future issues.

Changing or Canceling Your EIN

• When to Change: If your business undergoes a significant change, such as a merger or a change in business structure, you may need a new EIN. The IRS provides guidelines on when a new EIN is required.
• Canceling an EIN: If you close your business, you may need to cancel your EIN. This involves notifying the IRS and ensuring all related tax obligations are fulfilled.

Final Thoughts

An EIN is a fundamental part of running a business in the United States. It’s more than just a number—it’s a gateway to legal compliance, financial separation, and operational growth. By understanding how to obtain and use an EIN, you’re taking an important step toward establishing a strong foundation for your business.

Next Lesson >> Apply for Licenses and Permits