An Employer Identification Number (EIN) is a nine-digit federal tax ID issued by the IRS to identify businesses for tax purposes. Think of it as a Social Security number for your business. It’s required for filing taxes, hiring employees, opening business bank accounts, and obtaining licenses.
Who Needs an EIN?
You need an EIN if:
- You have employees.
- Your business is a corporation, partnership, or multi-member LLC.
- You file employment, excise, or alcohol/tobacco/firearms taxes.
- You operate a nonprofit, estate, or trust.
- You’re changing your business structure or buying an existing business.
Sole proprietors and single-member LLCs without employees can often use their Social Security numbers but may still choose an EIN for added privacy and professionalism.
How to Get an EIN
The process is free and quick:
- Apply online at the IRS website (fastest option).
- Submit Form SS-4 via fax or mail.
- International applicants can apply by phone.
Once issued, your EIN is permanent and tied to your business for its entire existence. Apply only after legally forming your business with your state. For more guidance, services like BusinessAnywhere can assist with EIN applications for a fee.
How EINs Work and Their Main Functions
This section dives into the structure, assignment process, and practical applications of an EIN, highlighting why this number is essential for businesses.
EIN Format and Assignment Process
An EIN is a nine-digit number formatted as XX-XXXXXXX (e.g., 12-3456789). Originally, the first two digits, known as the prefix, represented the business’s location. However, since 2001, the IRS has centralized the assignment process, and the prefix now reflects the IRS processing method. These digits indicate either the IRS campus handling the application or that the EIN was obtained through the online system.
The IRS issues EINs to a wide range of entities, including sole proprietors, corporations, partnerships, estates, and trusts. Businesses within the United States or its territories can apply online and receive their EIN immediately. For international applicants, the process involves telephone, fax, or mail. To streamline operations, the IRS limits EIN issuance to one per responsible party per day.
Key Functions of an EIN
An EIN plays a critical role in tax filing and banking compliance, serving as your business’s official identifier. Financial institutions often require an EIN to open business bank accounts, secure loans, or establish credit lines. This helps separate business finances from personal ones, ensuring clearer financial management. Additionally, an EIN is necessary for processing payroll and managing employment taxes. Many business licenses, permits, and vendor agreements also require an EIN to verify the business’s identity.
EIN vs. SSN
While EINs and Social Security numbers (SSNs) both act as identification numbers, they serve different purposes. An SSN is tied to personal financial activities, such as individual tax obligations and credit history. On the other hand, an EIN is exclusively for business use, creating a distinct identity for your company. This separation not only safeguards personal information but also simplifies tax filing and financial management. Importantly, EINs are permanent – once issued, they never expire or get reassigned, even if the business closes.
Who Needs an EIN?
If you’re running a business, understanding whether you need an Employer Identification Number (EIN) is crucial for staying on top of federal tax obligations. The IRS has specific rules about who must obtain an EIN, depending on your business structure and operations. Let’s break down the key scenarios where an EIN is required.
Business Types That Require an EIN
Certain business structures are legally obligated to have an EIN, as they cannot use a Social Security number for tax purposes. Here’s a closer look:
- Partnerships: Whether it’s a general, limited, or limited liability partnership, an EIN is mandatory before filing your first tax return.
- LLCs: Most LLCs need an EIN, except single-member LLCs without employees or excise tax responsibilities.
- Corporations: Both C-corporations and S-corporations must obtain an EIN.
- Tax-Exempt Organizations: Nonprofits, charities, and religious institutions all require an EIN for tax filings and operations.
- Other Entities: Estates, trusts (excluding certain grantor-owned revocable trusts), retirement plans, IRAs, real estate mortgage investment conduits, and farmers’ cooperatives also fall under this requirement.
Situations That Call for an EIN
Even if your business type doesn’t typically require an EIN, certain circumstances make it necessary, such as:
- Hiring employees
- Filing federal tax returns for employment, excise, or alcohol, tobacco, and firearms taxes
- Setting up retirement plans like SEP-IRAs, Solo 401(k)s, or SIMPLE IRAs
- Changing your business structure
- Filing for bankruptcy
- Purchasing an existing business
- Withholding taxes for non-resident aliens
- Maintaining a Keogh plan
When You May Not Need an EIN
Sole proprietors and single-member LLCs without employees, excise taxes, or Keogh plans can often use their Social Security number instead of an EIN. However, many business owners still choose to get an EIN. Why? Because banks often require one to open business accounts, and it helps protect your personal identity while adding a layer of professionalism to your business.
"An EIN helps prevent identity theft because it separates your business finances from your private ones. When you have an EIN, you no longer have to provide your SSN to prospective vendors and clients."
- Shai Shmarel, Content Manager, Tailor Brands
If you’re starting a new business, services like BusinessAnywhere can assist with EIN applications as part of their business formation packages. This ensures you’re compliant from the start while keeping your personal information secure. Ready to apply for an EIN? Let’s dive into the process next.
How to Apply for an EIN
Getting an Employer Identification Number (EIN) is a simple and free process. Here’s how you can apply and what information you’ll need to have ready.
Ways to Apply
The easiest and fastest way to obtain an EIN is through the online application, available Monday through Friday, from 7:00 a.m. to 10:00 p.m. Eastern Time. Once you complete the process, your EIN is issued immediately.
To apply online, head to the IRS website and click on "Begin Application." During the process, you’ll need to provide:
- Details about your business’s legal and tax structure.
- The reason for requesting an EIN.
- Contact information for a responsible party, including their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
- Your business’s physical U.S. address (P.O. boxes are not accepted).
- Legal and trade names, the entity start date, and a brief description of what your business does.
Prefer not to apply online? You can download Form SS-4 and submit it by fax or mail. For fax submissions, send the completed form to:
- 855-641-6935 (if you’re in the U.S.)
- 304-707-9471 (if you’re outside the U.S.)
For mail submissions, send your form to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
If you’re an international applicant, you can also apply by phone by calling 267-941-1099 Monday through Friday, from 6:00 a.m. to 11:00 p.m. Eastern Time.
Important: Only one EIN application is allowed per responsible party per day.
Information You’ll Need
Before starting your application, make sure you’ve gathered the following:
- Information about the responsible party – this includes their name, SSN, ITIN, or EIN (if the responsible party is another business entity) and their signature.
- Your business’s official name, mailing address, entity type (LLC, corporation, partnership, etc.), and the reason for applying.
- Additional details like your business’s start or acquisition date, the number of employees you expect to hire within the next 12 months, when you’ll begin paying wages, and the primary activity of your business.
The IRS has specific formatting rules for business names and addresses. Business names can only include letters (A–Z), numbers (0–9), hyphens (-), and ampersands (&). Street addresses are limited to 35 characters.
If someone else is applying on your behalf, they’ll need to complete and sign Form SS-4 and retain a copy for their records.
When to Apply
If you’re forming a legal entity, such as an LLC, partnership, or corporation, you must complete your state registration before applying for an EIN.
"If you are forming a legal entity (LLC, partnership, corporation, or tax-exempt organization), form your entity through your state before you apply for an EIN. If you don’t form your entity with your state first, your EIN application may be delayed."
– Internal Revenue Service
This point was reinforced in June 2025 by the NCH Internal Editorial Team, with insights from Cort W. Christie, MBA and Founder of Nevada Corporate Headquarters:
"The safest, most efficient path is to wait until your Articles of Organization have been filed and accepted by your state before applying for an EIN."
– NCH Internal Editorial Team
Once your state approves your business formation, it’s best to apply for your EIN within a few weeks. Be sure to use your LLC’s official name and formation date exactly as listed in your Articles of Organization. While you can use your EIN immediately for most business purposes, you may need to wait up to two weeks before using it for e-filing tax returns or programs like the IRS Taxpayer ID Number Matching Program.
For those looking to streamline the process, BusinessAnywhere offers an EIN application service for $97. This service ensures your application is completed accurately and submitted at the right time during your business formation journey.
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Common Uses for EINs
Once you have your EIN, it becomes a vital part of your business operations. This nine-digit number acts as your business’s official tax ID, enabling you to manage essential tasks effectively.
Daily Business Functions
If your business has employees, an EIN is non-negotiable. You’ll need it to handle payroll, issue W-2 forms, and manage employment taxes. This requirement kicks in as soon as you hire your first employee, whether they’re full-time, part-time, or seasonal.
Banks also require an EIN to open a business account. This helps keep your personal and business finances separate, which is crucial for maintaining financial clarity and professionalism. Even if you’re a sole proprietor and not legally required to have an EIN, it can simplify banking and add credibility to your business.
Additionally, an EIN comes into play when applying for business licenses or permits. State and local governments often use it to verify your business’s legitimacy and ensure compliance with regulations. On top of that, lenders, credit card companies, and suppliers frequently use your EIN to assess your business’s creditworthiness, independent of your personal credit score.
Beyond these routine functions, an EIN is essential for staying legally compliant.
EIN and Legal Compliance
The IRS mandates that businesses structured as corporations or partnerships must have an EIN, even if they don’t employ anyone.
An EIN is also necessary for filing certain tax returns, including employment and excise taxes, or for handling specific situations like withholding taxes for payments made to nonresident aliens. It allows you to separate business taxes from personal ones, making tax filing more straightforward and reducing the risk of errors or penalties.
For businesses involved in estate planning or retirement benefits, an EIN is required to manage trusts, estates, or retirement plans such as a Keogh plan.
Beyond its practical and legal uses, the permanence of an EIN offers long-term stability for your business.
EINs Are Permanent
One critical aspect of an EIN is its permanence. Once assigned by the IRS, your EIN is tied to your business entity for its entire existence. It cannot be transferred to another business or changed for convenience.
This permanence ensures consistency across tax filings, banking relationships, and regulatory compliance. Even if your business undergoes changes, such as restructuring, the EIN remains attached to the original entity.
Each legal entity requires its own EIN, so careful planning is essential when forming new businesses. The fixed nature of an EIN also builds trust with banks, suppliers, and government agencies, serving as a reliable identifier throughout your business’s lifespan.
For entrepreneurs using BusinessAnywhere’s EIN application service, this permanence ensures they receive their EIN correctly and on time, supporting smooth business formation and operations.
Conclusion
Your EIN plays a crucial role in maintaining tax compliance and establishing your business’s credibility. This unique nine-digit federal tax ID functions like a Social Security number for businesses, enabling essential operations such as filing taxes, opening bank accounts, hiring employees, and building business credit.
Having an EIN helps separate your business finances from personal ones, lowering the risk of identity theft and boosting your credibility with banks, suppliers, and government agencies. It’s a key step in ensuring your business operates smoothly and professionally.
Applying for an EIN through the IRS is free and straightforward, but timing matters. You should only apply once your business is legally formed at the state level since the EIN serves as a permanent identifier that cannot be changed or transferred. This ensures consistency across all your regulatory and business dealings.
For those who prefer a hassle-free experience, BusinessAnywhere’s EIN application service can provide your federal tax ID quickly and accurately, saving you time and effort.
FAQs
Why would a sole proprietor or single-member LLC get an EIN even if it’s not required?
Even though it’s not always required, a sole proprietor or single-member LLC might opt to get an Employer Identification Number (EIN) for several practical reasons. For one, an EIN helps keep personal and business finances separate, which is key for maintaining accurate financial records and safeguarding your personal identity. It’s also useful for simplifying tax filing and is often necessary when setting up a business bank account or applying for specific permits or licenses.
On top of that, having an EIN can set your business up for future expansion, like hiring employees or transitioning to a different business structure. It’s a small but meaningful step toward creating a more professional and well-organized business framework.
What are the benefits of having an EIN for your business?
An Employer Identification Number (EIN) plays a crucial role in managing and organizing your business finances. It creates a clear line between personal and business finances, which can make handling taxes much smoother. With an EIN, you can easily open business bank accounts and start building business credit. This separation not only simplifies financial management but also ensures you’re meeting federal tax regulations.
Another major advantage of having an EIN is the added layer of identity protection it provides. By using an EIN instead of your Social Security Number (SSN) on business-related documents, you significantly lower the risk of identity theft. This added security lets you focus on running and growing your business without unnecessary worry.
How can international applicants apply for an EIN?
International applicants looking to obtain an Employer Identification Number (EIN) have several options. They can contact the IRS directly by phone at 267-941-1099, submit Form SS-4 via fax or mail, or, if eligible, apply online. To get started, applicants must complete Form SS-4, which requires them to provide business information and verify their identity.
For those who don’t have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), additional documentation – like a copy of their passport – might be necessary. Keep in mind, the application process and requirements can differ based on the applicant’s country and the chosen submission method.
