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Employer Identification Numbers (EINs): Who Needs Them and How Do You Get One?

By Caleb Groos | Updated by Kit Yona, M.A. | Last updated on

Starting a new business is like making a fancy meal from an extremely complex recipe. Days are packed as you try to assess your business needs, figure out your payroll taxes, and get your small business structure in place, often all at the same time. You're likely to deal with government agencies that you never knew existed.

Now, you see a reminder about getting an EIN on your to-do list. An EIN? Is that a vital part of the stew that is your potential business entity? Let's see what an EIN is needed for:

  • Operate a partnership or corporation
  • Pay sales and excise taxes
  • Change business structures or ownership
  • Administer certain trusts, retirement plans, and estates
  • Hire employees

That certainly seems like an important ingredient if you want your business to start cooking.

A Number of Fine Possibilities

An employer identification number (EIN) is a nine-digit number used by the US Internal Revenue Service (IRS) as a taxpayer identification number (TIN). It's like a Social Security number (SSN) for a business. They're unique for each company. Your EIN stays with you for as long as you own the business and keep the same corporate structure.

Some hold the opinion that the government considers a dash of confusion to be a feature rather than a bug. With this in mind, note that an EIN is also referred to as a federal employer identification number (FEIN) and a federal tax ID number.

Before getting an EIN, you should form your entity through your state first. This includes all legal entities such as limited liability companies (LLC), single-member LLCs, partnerships, corporations, tax-exempt organizations, self-employed business owners, and sole proprietorships. You'll need to get an EIN if you answer yes to any of the following questions:

  • Do you have employees?
  • Do you withhold taxes on income, other than wages, paid to a non-resident alien?
  • Do you operate your business as a corporation or a partnership?
  • Do you file any of these tax returns: Employment; Excise; or Alcohol, Tobacco, and Firearms?
  • Are you involved with any of the following types of organizations?
    • Estates
    • Farmers' cooperatives
    • Plan administrators
    • Real estate mortgage investment conduits
    • Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
    • Non-profit organizations
  • Do you have a Keogh plan?

Your EIN is ready from the moment you get it for opening business bank accounts, applying for business licenses, and filing a federal tax return by mail. You should wait two weeks before trying to pass an IRS Taxpayer ID Number (TIN) Matching Program, e-filing a tax return, or making electronic tax deposits.

An EIN Is Free. Here's How To Get One.

While there are websites that offer to get you an EIN, there's no reason not to get yours through the IRS. Both applying for and having an EIN are free through the IRS, so you don't need to pay someone to get one for you.

If Your Principal Place of Business Is in the U.S. or a U.S. Territory

It's a good idea to prepare before applying through the IRS website. Your application will timeout after 15 minutes of inactivity and your work isn't saved. Having the following information ready should make for a smoother application process:

  • Your business entity type (if a tax-exempt nonprofit organization, make sure you're legally formed before applying for an EIN)
  • The legal name and Social Security number or Taxpayer ID number for the responsible party in control of your business or organization (this depends on your type of entity and includes the principal officer, the general partner, a sole proprietor, or an executor - but it must be an individual)
  • The maximum number of employees you may have by the end of the year

The online application process at the IRS website is designed to take only minutes and your EIN is ready for immediate use. You can also apply by filling out Form SS-4 and sending it via fax (855-641-6935) or by mail (Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999). Your EIN will arrive within business four days if faxed and four weeks if mailed.

If Your Principal Place of Business Is Outside the U.S.

Either you (or your responsible party) will need an Individual Tax Identification Number (ITIN) if you don't have an SSN. The EIN application online portal isn't available for businesses with their principal place outside the United States. Options for filing include:

  • By phone at 267-941-1099 Monday – Friday, 6 a.m. to 11 p.m. ET
  • Faxing Form SS-4 855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.)
  • Mailing Form SS-4 to Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999

Regardless of how or where you apply, only one application per responsible party is permitted per day. Your EIN is never canceled, but the IRS can deactivate it on request. You won't need a new EIN unless you open a different business or change your corporate structure.

Some FinCENtive

There's a chance that you'll have to provide information on your company's beneficial owners, whether that's yourself or someone else. As of January 1, 2024, certain types of companies and entities are required to report certain information on the beneficial owners to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN).

E-Z EIN

Business owners (i.e., you) will use their EIN for business tax returns, tax reporting, and business loans. It's used as an identifier for all types of businesses and sticks with your business for as long as you own it. Not bad for something that costs the low, low price of free.

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