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Obtaining an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business for federal tax purposes. You can think of it as the business equivalent of a Social Security number. Many businesses obtain one when they are first established because it is often required for banking, licensing, and tax filing purposes.​​

Why does an EIN Matter?

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An EIN allows your business to:

• File federal tax returns

• Hire employees

• Open a business bank account

• Apply for business loans or lines of credit

• Obtain certain business licenses and permits

• Establish business credit

• Keep your personal Social Security number more private in many business transactions

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For many business owners, obtaining an EIN is one of the first steps toward establishing a separate business identity.

Who Needs an EIN?

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Generally, you should obtain an EIN if your business:

• Has employees

• Operates as a partnership

• Operates as a corporation

• Is a multi-member LLC

• Elects to be taxed as an S Corporation or C Corporation

• Files certain federal excise, employment, or other business tax returns

• Opens a business bank account that requires an EIN

Some single-member LLCs and sole proprietorships may also choose to obtain an EIN, even if it is not legally required.

Do Sole Proprietors Need an EIN?

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A sole proprietor without employees may be able to use their Social Security number for federal tax purposes. However, many still choose to obtain an EIN because it allows them to provide an EIN instead of their Social Security number on forms such as the W-9 and when opening business accounts.

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Using an EIN can also make your business appear more established to banks, vendors, and clients.

When Should You Apply?

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The best time to apply for an EIN is after your business has been legally formed but before you:

• Open a business bank account

• Hire employees

• Begin payroll

• Apply for business licenses

• File tax returns

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Obtaining an EIN early helps avoid delays as your business grows.

How do you obtain an EIN?

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Applying for an EIN is free through the IRS.

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The application typically requires information such as:

• Legal business name

• Responsible party

• Business address

• Business entity type

• Reason for applying

• Date the business started

• Expected number of employees (if applicable)

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If your application is approved online, the IRS generally issues your EIN immediately.

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Important:  Be cautious of websites that charge a fee to obtain an EIN on your behalf. The IRS does not charge a fee to issue an EIN.

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