An employer identification number (EIN) is essentially a Social Security number for your business. Most businesses need it to carry out essential tasks like creating a bank account or paying taxes.

Not all business owners need to secure an EIN, but it is necessary if you have employees, operate under a partnership, or meet any of the more nuanced factors we cover below. Understanding who needs to apply and the benefits that come with having an EIN can give your business a real advantage.

What is an EIN?

An EIN is a unique nine-digit number that the Internal Revenue Service (IRS) uses to identify your business for tax purposes. The state issues EINs and uses them on state tax forms. Businesses can also use EINs to hire employees.

Other common ID numbers: Tax Identification Number (TIN), Federal Identification Number (FEIN), 95 number, EIN Number, Business Tax ID, Federal Business Tax ID, Business Taxpayer ID number, or Business Tax ID Number.

What are the main differences between an EIN and other ID numbers?

An EIN is the standard tax ID for businesses located in the U.S. with employees and/or more than one owner who meet the additional criteria listed above.

If your business doesn’t meet all of the criteria, you can use alternatives like a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) for those who don’t have a SSN.

Note: Social Security numbers and tax IDs follow the format: xxx-xx-xxxx. EINs, on the other hand, follow this format: xx-xxxxxxx.

Is an EIN the same thing as a Tax ID?

A tax ID is a broad term the IRS uses to identify businesses for tax purposes. There are 4 primary types of tax IDs:

• Social Security number (SSN)
• Taxpayer ID Number (TIN)
• Employer ID Number (EIN)
• Individual Taxpayer Identification Number (ITIN)

The only businesses that can use an SSN for taxes are sole proprietorships, given they don’t have any employees. Meanwhile, companies run by entrepreneurs without a Social Security number or have headquarters abroad will rely on an ITIN to identify their business when tax time rolls around.

All other businesses will use a TIN/EIN to identify themselves. These tax ID numbers are assigned to an entity rather than a business owner. Like all other tax IDs, the IRS uses it to identify businesses for taxes, but it’s only for businesses.

EIN vs. TIN

A taxpayer identification number (TIN) is and ID number that the government assigns businesses with employees. It’s a general tax ID number and operates similarly to an EIN. The only difference is that an EIN is an employer ID number.

Sole proprietorships, corporations, nonprofits, government agencies, and numerous other entities use TIN/EIN numbers.

EIN vs. FEIN

A FEIN is a federal employee identification number. It serves the same purpose as an EIN, except the federal government issues it instead of the state. A FEIN also allows you to enroll in the Electronic Federal Tax Payment System (EFTPS), letting you easily make tax payments over the phone or online.

Who needs an EIN?

Any company that has employees on staff or has a company with a qualifying business structure is legally required to have an EIN. The businesses that must have EINs according to the IRS include:

• Corporations
• Partnerships
• Limited liability companies
• Nonprofits

When do trusts and estates need an EIN?

If a trust or estate earns income, you might need to obtain an employer identification number for tax filing purposes. You must also get an EIN if you have an irrevocable trust without a grantor trust classification.

What is an EIN used for?

You can use an employer ID number to verify your company’s identity and its tax accounts. EINs are extremely useful because they allow you to:

• Purchase company cellphones
• Open a bank account
• Apply for a business permit
• Hire employees
• Withhold and pay taxes
• Apply for business loans
• Open credit cards

What situations require an EIN

Sole proprietorships and contractors aren’t generally required to have one. However, an EIN is required if you:

• Started a business
• Intend to hire employees
• Will open a company bank account
• Changed your business’s structure
• Created a trust using estate funds
• Plan to withhold non-wage earnings from an expatriate
• Started a pension plan
• Need one to comply with IRS withholding requirements
• Formed a corporation or partnership
• Represent a deceased person’s estate that includes a business
• Manage someone’s estate through probate court upon their death
• Are a state or local agency
• Pay federal excise taxes
• Offer a pension, profit-sharing options, or retirement plan
• Have a business that becomes a multiple-member LLC regardless of how you choose to tax it
• Own a single-member LLC that elects to be taxed as either a C corporation or an S corporation
• Are a representative who oversees an estate that operates a business after the owner’s death

Why get an EIN if you don’t have to

Generally, independent contractors, freelancers, entrepreneurs running small businesses out of their homes, and people with side jobs who capitalize on the gig economy are not required to get an EIN.

But even if the IRS does not require an EIN, you may want to get an EIN if you:

• Want to open a bank account specifically for business income and expenses.
• Buy items for your business with a company card.
• Need to take out a business loan to start or scale your business.
• Don’t want to use your personal Social Security number.

Just keep in mind that an EIN is strictly for business and can’t replace your SSN for personal tax filing purposes.

Purpose and benefits of EINs

There are no repercussions if you acquire an EIN and never use it. Unless, of course, you count the time you spent applying for it.

There are numerous benefits to having an EIN, which is why many businesses choose to get one even when they aren’t legally obligated to. You can use an EIN to identify your business, and taking the time to apply for one helps you:

• Prevent identity theft
• Make tax filing easier
• Hire employees
• Reduce personal liability
• Open bank accounts and acquire business credit cards
• Qualify for business loans

Ways to use your Employer Identification Number (EIN)

Once you obtain your EIN, it’s time to put it to use! You can use it to:

• Open a company bank account
• Apply for business credit cards
• Obtain business permits
• File tax returns
• Hire your first employees
• Qualify for business loans
• Create an estate, nonprofit, or trust

What other advantages come with having an EIN?

In some ways, an EIN is one of the essential tools of the business world. The number makes it easier to:

• Apply for a business license. Laws vary by state, but many require business owners to obtain an EIN before they can get a business license and open their doors.
• Get a business bank account. Many banks require an EIN to open a business bank account, along with the appropriate business license to show that you can operate in your area. Depending on your business structure, you may have to show articles of incorporation or a “doing business as” (DBA) certificate.
• Take out a bank loan. Most banks require you to have a business account before you apply for a loan.
• Hire employees. If you have or plan to hire employees, an EIN is absolutely necessary. You can’t set up your payroll system without one.
• File your taxes. If you are required to have an EIN and don’t have it before you file your taxes, you open yourself up to all kinds of tax penalties.
• Boost credibility. An EIN helps establish you as a responsible person committed to your business.

EIN application overview

The IRS EIN application process is free and easy to complete.

You can apply for an EIN on the IRS website, or you can use an independent service to complete the process for you.

Once you complete the application, you will receive your EIN immediately. If you also need a confirmation letter, be sure to install Adobe Reader before beginning the process. During the application process, you will need to complete 12 steps:

1. Verify that you’re eligible

2: Understand the application process

3. Determine who will apply

4. Gather documents for the online application

5. Accept permissions

6. Identify yourself

7. Establish your reason for applying

8. Complete the authentication

9. Disclose company addresses

10. Enter final details

11. Complete the EIN confirmation

12. Submit your application

The IRS’s EIN assistant will guide you through the entire process and tick off each step as you complete them.

Tip: Establish your company before you request an EIN.

1. Verify that you’re eligible

Depending on your entrepreneurial background, you may not be eligible to apply for an EIN online. If you have a unique situation, do some research to determine if there are any limitations you will need to navigate.

A common issue business owners run into is trying to apply for an EIN online after already obtaining one online. In cases such as these, you must either fax or mail in your application.

Only people who meet the following criteria are eligible to apply for an EIN:

• Have a principal business located in the U.S. or one of its territories
• Have a valid tax ID
• Own or control the company and have only acquired one EIN that day

Tip: If your company isn’t incorporated in the U.S. or one of its territories, you don’t qualify to complete the online application.

2. Understand the application process

Complete the application in one go, or you will need to restart. You will not be able to save your progress and return, and your session will end if you take more than 15 minutes to continue.

Register at the right time

Generally speaking, you should apply for an EIN as soon as you register your company. If you don’t, the next best time is at least two weeks before your taxes are due or you intend to apply for a business loan.

This is because it takes approximately two weeks for the IRS to process your EIN (even though you get the ID number immediately).

3. Determine who will apply

The IRS will only issue one EIN to your business per responsible party (the person who owns or controls the entity) each day, so it’s important to decide who should apply. You can choose to use a third party to complete the process on your behalf—but first, you will need to grant authorization.

To grant a third-party authorization, you must:

• Complete and sign Form SS-4, including the third-party designee section.
• Read and sign a statement authorizing the nominee to apply for and receive an EIN on your behalf.
• Ensure that the nominee keeps a copy of the statement in their files.

All of this must be done before they start the application, but once they’re approved, the IRS can disclose your EIN to them. As the taxpayer, you will also receive a notice about the application status and filer once they submit the online form.

4. Gather documents for the online application

You will need documents proving that you have registered your business under a qualifying business structure:

• Personal identification: Social Security card, ITIN, and birth certificate
• Company identification: Articles of incorporation and business registration certificate, and DBA name
• Employee information: Corporate resolution detailing the names, titles, and max salaries of any new employees

Application filers who are certain of the information on these documents won’t need physical copies. If you plan to submit by mail or fax, you will also need to have the SS-4 form handy.

5. Accept permissions

When you are ready to begin the online application, you will need to consent to an IRS warning stating that the government has the right to monitor your activities throughout this document. Click “OK,” and then you can begin.

6. Identify yourself

Once you confirm that you selected the correct business structure, you’ll need to share more information about yourself and your partners if you have any. You will also need to identify the state your company is headquartered in and how many members are in your organization. The application will also ask if you’re married to your business partner.

The information you input here should belong to the responsible party (the owner or a member of the company). If you’re filing on behalf of the responsible party, you should disclose that here.

7. Establish your reason for applying

When you apply for an EIN, you must share your reason for applying. The IRS recognizes several reasons for needing an EIN. For example, if you:

• Started a new business
• Hired one or more employees
• Opened a bank account
• Changed business structure
• Purchased an existing business

8. Complete authentication

At this point, you will need to complete the authentication process by inputting your SSN or ITIN. If you do not have either of these, you will be unable to proceed with the application.

9. Disclose addresses

The EIN application also requires you to disclose the location of your business. The address you list on your application must be:

• Located in the U.S.
• A physical location

It cannot be a:

• P.O. Box

10. Enter final details

This is the last step in the application process before you decide on how you want your confirmation letter and submit the application. This step will ask you to disclose your company’s:

• Legal name
• Location (county, state, and territory)
• Start date

11. Complete EIN confirmation

The EIN confirmation section of the application lets you decide how you would like to receive your confirmation letter. 

You can either choose to receive your letter:

• Online: Use Adobe Reader to download and print the letter.
• By mail: It may take up to two weeks for the IRS to mail your letter to the address you listed.

12. Submit your application

Once you have completed the application and answered follow-up questions based on your answers, you can click submit. Once you do this, you will immediately receive an EIN. From there, you can download, save, and print the EIN confirmation notice.

Employer identification number (EIN) FAQs

If you’re still unsure of how to get started with the EIN application or if you need one, keep reading for answers to some commonly asked questions.

Is it better to use a Social Security number or an EIN?

If the IRS determines that you need an EIN, there’s no way around it. But it’s still a good idea to use an EIN for your business, even when it’s not required, for one key reason—avoiding personal risk. Using your SSN for business purposes increases the risk of:

• Identity theft
• Tax penalties
• Liability issues

An EIN helps keep your personal and business finances separate. It reserves your Social Security number for personal needs and keeps identity thieves from ripping off your personal assets. The IRS recommends using your Social Security number only if you have a very simple business structure and no employees.

You should also use an EIN rather than your SSN if you plan to create a Keogh plan.

Tip: Set up a fraud alert immediately if you plan to use your SSN for business identification or tax purposes.

What information do you need to get an EIN?

To obtain an EIN, you must first prove your identity to the government and that you have a legitimate business. Some information you’ll need to provide includes the:

• Name of the business owner or whoever is responsible for the company
• Identification of the person in charge (SSN, ITIN, EIN)
• Business’s legal name
• Business structure (corporation, LLC, sole proprietorship, partnership)
• Business’s mailing address
• Reason for requesting an EIN
• Date the business was created or acquired
• Number of employees you plan to staff
• Date you will start paying wages
• Industry you operate within

If you would rather have someone else receive your EIN confirmation letter and the number itself—like a lawyer or accountant—you will also need to list their contact information.

How to close an employee identification number

The IRS can’t cancel an EIN, but they can close out your account. Since each EIN is one of a kind, it can’t be reused, and it will be available if you ever decide to use it again.

To close your EIN account, send your request to the IRS at one of the following addresses:

Internal Revenue Service

MS 6055

Kansas City, MO 64108

Or

Internal Revenue Service

MS 6273

Ogden, UT 84201

In your letter, you should explain your reason for closing the account and share the complete legal name of your entity, the EIN, and your address.

What should I do if I misplace my EIN?

One of the easiest ways to find your EIN is to review old bank statements and taxes to see if it’s listed there. If you can’t find it, you can call the IRS.

If your company is publicly traded, you can look up the EIN online via the SEC’s website. All you have to do is search the company’s name and review the most recent 10-Q or 10K form. If that doesn’t work, you can try to find it on:

• The computer-generated receipt the IRS sent after you applied for an EIN
• Bank statements for any account you used an EIN to open
• Old tax returns

Can I have multiple EINs?

Yes, you can have as many EINs as you do business entities, but each business can only have a single EIN.

You may need to apply for a new EIN if you make any substantial changes to your business, like adjusting its structure.

Prepare your business for success

Still not sure if you need an EIN? You can take the IRS test for a concrete answer based on your unique answers. Then when you’re ready to start a business, register your business and prepare for the future by acquiring an EIN.

It’s generally best to form your LLC first since you will need to report the company’s legal name and the date it was formed on the EIN application. Once you have your EIN, you can open an official bank account or start hiring employees.