Does My Business Need an EIN?
The Internal Revenue Service (IRS) has specific, established, and helpful rules that explain when you need to apply for an EIN for your business formation. Below we outline a general criteria that will help guide you to understand when your business is required to get an EIN:
- Does your company have employees?
- Is your business a sole proprietorship with or without employees?
- Is your business a Limited Liability Company (LLC) with or without employees?
- Is your business a partnership or a corporation?
- Is your business a non-profit organization?
- Are you responsible for withholding taxes?
- Do you have a trust or estate?
According to the IRS, "All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,” controls, manages, or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity."
If your business structure is a sole proprietorship with no employees and doesn’t file any excise or pension plan tax returns, then you are not required to get an Employer Identification Number (EIN). However, it’s usually advisable for taxpayers to get an EIN number in order to open a business bank account, build business credit, and lower the risk of identity theft.
If your business entity is a single-member LLC with no employees or excise tax liability, then you are not required to get an Employer ID Number. However, it’s usually advisable to get an EIN for your LLC in case you decide to hire employees later, and in order to maintain your corporate veil.
Multi-Member LLC or Partneships
If your business structure is a partnership, or multi-member LLC, you will need to get an EIN number because the LLC must file a partnership return and provide K-1s to members of the LLC. Each LLC member will pay taxes to the IRS on their individual tax return.
- If you have an S corporation tax structure, you will need to file corporate income taxes on your tax return through Form 1120S (includes expenses and losses) and Form K-1 for individual shareholders (corporation's income, deductions, and credits); hence an S corp requires an EIN.
- If you have a C corporation, your business is viewed as a separate entity. The C Corp will pay a flat tax at the corporate level and is taxed once again on the shareholders' end through Form 1099-DIV; hence a corporation requires getting an EIN. A C corporation will file their federal tax return by using Form 1120.
If your business structure is a non-profit, you will need an Employer ID number to open a bank account and hire employees. A non-profit will also need an EIN number to apply for business licenses from local government.
Trusts and Estates
In addition to business entities such as sole proprietorships, LLCs, and corporations, EINs are also used for trusts and estates.
Doing Business As (DBA) Names
Sole proprietors, partnerships, LLCs, and corporations can operate under a DBA name. The same rules apply to a business with a DBA name as would apply to the business entity type as described above.
Once you've determined that your business needs an Employer Identification Number (EIN), you can visit the online IRS EIN Assistant website and follow their step-by-step application process. The EIN Assistant provides questions and answers, but we've also simplified the steps down below using our helpful guide.
Recommended: You can request and receive a free EIN from the IRS directly by using the online EIN Assistant.
Why Should A Business Get an EIN?
No matter what kind of business you have, it is usually a good idea to get an EIN number. Here are some advantages of having an EIN:
Most banks require an EIN in order to open a business banking account.
- A business bank account will simplify the process of tracking and managing your professional expenses.
- You can also build business credit and qualify for more loans.
You will need an EIN before you can hire employees.
- Employees will file their taxes separately under the LLC’s 1040 form.
- Employers need an EIN for an LLC to set up payroll, and the IRS will use the business’s EIN to track payroll taxes for taxpayers.
- An EIN number is necessary to register for your State's employer taxes.
If you’re a single-member LLC, an EIN helps you maintain your corporate veil.
- The corporate veil protects business owners from personal liability for the business’s debts.
- Maintaining the corporate veil also establishes credibility and professionalism by allowing your business to have its own identity separate from its owners.
An EIN will help to prevent identity theft.
- Your Social Security number (SSN) will be more private.
- It’s less likely for someone to break into your accounts when you keep business finances and personal finances separate.
Read more about the benefits of getting an Employer Identification Number (EIN).
How To Get a Free EIN
The quickest and simplest way for taxpayers to get a free EIN is to apply online on the IRS website using the EIN Assistant.
Here is some helpful information to guide you in requesting your EIN number. We've made it easy to follow the EIN Assistant application process:
- The IRS’s hours of operation for obtaining your EIN are Monday-Friday from 7 a.m. to 10 p.m
- Only United States and U.S. Territories-based businesses are eligible
- You must have a valid Taxpayer Identification Number (SSN, ITIN,EIN)
- The entity owner or responsible party may only apply once per day
- Your application must be filled out in one session and cannot be saved
- The session will time-out after 15 minutes if not in use
- You will immediately get an EIN after the form is completed
- Applications cannot be processed if an EIN was previously obtained online
You can also apply for an Employer Identification Number (EIN) by fax or mail by completing Form SS-4. If you are submitting by fax, send your EIN application to fax number (855) 641-6935. If applying by mail, submit to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999.
You will need to answer the following questions during the EIN application process.
- What type of business do you wish to start? (LLC, Sole Proprietorship, Corporation, etc.)
- How many owners does your business have, and in what state is your business located?
- Why are you applying for an EIN?
- Who will be the “responsible party” or principal officer of the business?
In addition, you will need to fill out the name, SSN or TIN, and contact information of your business’s responsible party. If you have any further questions, you can also call the IRS customer service line by dialing (800) 829-1040.
International EIN Applicants
If you don’t have a SSN and you are not a U.S. citizen, you can still get an EIN number. Simply download and fill out IRS Form SS-4. You can leave section 7b blank.
To submit your application, call the IRS at 267-941-1099 (NOT a toll-free number) Monday through Friday between 7:00 a.m. and 10:00 p.m. Eastern Standard Time. You may also apply for an EIN by fax at 304-707-9471.
This phone number is not toll free. We recommend using a web calling service to save money on the call. You should expect to spend up to an hour on the phone before you get your EIN. Since Mondays are the busiest day for the IRS to receive calls, we suggest calling any other day of the week.
Frequently Asked Questions
Do I need an EIN if I’m self-employed?
You don’t need an EIN if you’re self-employed; you can simply use your Social Security number. However, some people who are self-employed choose to apply for an Employer Identification Number (EIN) instead of using their Social Security number to reduce the risk of identity theft; it’s less likely for someone to break into your accounts when you keep business finances and personal finances separate.
Is there a difference between an EIN and a TIN?
No, there is not a difference between an Employer Identification Number (EIN) and a Taxpayer Identification Number (TIN). Both refer to the nine-digit number issued by the IRS for your business.
Is there a difference between an EIN and a FEIN?
No, there is not a difference between an Employer Identification Number (EIN) and a Federal Employer Identification Number (FEIN). A FEIN can also be referred to as a Federal Tax Identification Number.
How do I look up my EIN number?
It is very easy to look up your EIN number, and there are several ways you can do so. First, the IRS will typically email or send a physical letter confirming your EIN application. You can also check business documents such as tax returns to find your EIN printed there.
How do I look up another business’s EIN?
You can look up another business’s EIN by searching for the company on the Securities and Exchange Commission (SEC) EDGAR online Forms and Filings database.
How do I recover my EIN if I forget or lose it?
If you still aren’t able to find your EIN by checking for a confirmation email or letter, or by identifying it on your business documents, you can simply call the IRS EIN Department at 1-800-829-4933 to speak with one of their representatives. Their hours of operation are Monday-Friday from 7 a.m. to 7 p.m.
What is the difference between an EIN and a DUNS number?
An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to keep track of a business’s tax reporting. The Data Universal Numbering System (DUNS) a nine-digit number issued by Dun & Bradstreet, a business analytics company; a DUNS number helps businesses create and identify their credit reports.