What is an EIN?
An employer identification number (EIN) is a unique nine-digit tax ID issued by the IRS to business entities and certain other organizations in the United States. Your EIN is typically permanent and doesn’t need to be renewed. This number is the corporate equivalent of a Social Security number for individuals, used across federal and state agencies.
“Obtaining an EIN is a critical initial step that not only legitimizes your business in the judgment of the IRS, but it also unlocks access to essential operational services like payroll processing, business banking and vendor relationships.”
—Tarik Griffith, accountant
Why and when to apply for an EIN
Obtaining an EIN is important if you’re starting a business or hiring your first employee. Many businesses need or choose to use an EIN to file taxes, open a business bank account, apply for financing, build business credit and hire employees.
Unlike a Social Security number, an EIN is tied to the legal entity, not the owner personally. Consider obtaining an EIN if you:
- Have a business with employees, including sole proprietors (many businesses without employees still require one)
- Purchase or inherit a business
- Start a multi-member limited liability company (LLC) or partnership
- Own any business entity that’s taxed as a corporation
- Change the structure or ownership of your business
- Register for state tax IDs
How to apply for an EIN
To apply for an EIN, you can apply online, fax or mail Form SS-4 to the IRS. The online process is much faster. Follow these steps to complete your online application:
1. Visit the IRS website
The EIN online application page is available Monday through Friday from 7 a.m. to 10 p.m. EST. It clarifies the eligibility requirements and time restraints. Select the “Apply Online Now” button.
The online application is available only to entities with a U.S. mailing address and a responsible party with a valid Social Security number (SSN) or individual taxpayer identification number (ITIN).
2. Declare your business entity’s legal and tax structure
You can apply as a:
- Trust
- Estate
- LLC
- Corporation
- Partnership
- Sole proprietor
3. Provide information about the members if your business operates as an LLC
You can specify the state where your LLC is located and the number of members you have. If you have a single-member LLC, the IRS may initially classify your business as a disregarded entity. For federal income tax purposes, multi-member LLCs are generally treated as partnerships unless they elect a different tax classification.
4. Explain your reason for requesting an EIN
You can select from these choices:
- Purchased active business
- Changed type of organization
- Banking purposes
- Hired employees
- Started a new business (the most common selection)
5. Identify the responsible party
This is a contact person who’s responsible for handling the business’s tax matters. You may be required to supply their name and Social Security or individual tax identification number. The IRS stipulates that this be a real person, not a legal entity.
6. Supply a physical address and phone number for your business
Businesses must provide a U.S. physical address and phone number for correspondence. Note that while the IRS requires a mailing address, some states may not accept P.O. boxes for registration.
Using a consistent address across EIN documents, bank accounts and state registration helps to keep things organized.
7. Provide important details about the business entity
You will be asked to provide the business entity’s legal name, trade name, if applicable and start date. Enter this information exactly as it appears on your articles of formation or other legal documents, without abbreviation.
8. Answer a series of tax-related questions
The application will ask you questions about alcohol, tobacco and firearms, quarterly federal excise tax returns, gambling and vehicles. Many applicants answer “no” to all of these questions. These answers will determine whether additional IRS forms or registrations will be required in the future.
9. Choose an applicable business category
The application typically provides a list of categories that signal what your business does. Choose the category that best reflects your primary revenue-generating activity. If you’re unable to find an accurate category, you can select “other” to go to another page of options. If you’re still unable to find an appropriate choice, you may select “other” again and manually enter your response.
10. Choose how you want to receive your confirmation information
The IRS typically allows you to receive your EIN confirmation, Form CP 575, by mail or online. If you select mail, it may take up to four weeks to receive it.
The online method often lets you access the letter immediately in PDF format. Save and store this document for safekeeping. You will use it for banking, vendors and government purposes.
11. Review your EIN application
Review the application to verify all information is correct before submission. The online application lacks an editing function, so EIN corrections require contacting the IRS directly.
Entering accurate information, such as the exact entity type and correct spelling, helps support a smooth setup and avoids the need for 147C correction forms.
Securing an IRS EIN is an important step that helps legitimize your business and unlock essential operations like banking, payroll and tax filing.
