Employer Identification Number
An EIN is a unique identifier for businesses, similar to how a Social Security Number (SSN) identifies individuals. This number is used by the IRS to track a business's tax reporting and is required for many key business activities, such as opening a bank account, applying for business licenses, or filing tax returns.
An EIN is needed by any business that pays employees or operates as a corporation or partnership. It's also required for certain non-profit organizations, trusts, estates, and other entities. EINs are necessary for filing various business tax returns, for setting up retirement accounts for workers, and sometimes for opening business bank accounts.
The IRS does not charge for obtaining an EIN, and there are several methods to apply:
While both are unique identifiers, an EIN cannot be used in place of an SSN for individual purposes, such as personal income tax filings. EINs are specifically designed for business entities, while SSNs are for personal identification.
Yes, businesses can apply for an EIN online via the IRS's EIN Assistant. This is often the quickest way to obtain an EIN.
If a business loses or misplaces its EIN, it can contact the IRS directly. The IRS will then verify the identity of the person making the request before providing the number.
Any business in the United States or U.S. territories that is required to pay federal taxes must get an EIN. This includes corporations, partnerships, and limited liability companies (LLCs). Non-profit organizations, estates of decedents, government agencies, certain individuals, and others also require an EIN.
The time it takes to get an EIN depends on the method of application. Online applications can result in an immediate EIN. Fax applications take about four business days, and mail applications take up to four weeks.
Business structure changes, such as from a sole proprietorship to a corporation or from a partnership to a sole proprietorship, usually require a new EIN. However, simple name changes or changes to the business address do not typically require a new EIN.
The primary purpose of the EIN is to identify a business entity for tax purposes. However, it is also used for opening business bank accounts, hiring employees, applying for business licenses, and establishing credit profiles for businesses.
The IRS typically allows a business entity to have only one EIN. However, businesses that operate multiple, distinct divisions may be able to obtain separate EINs for each.
Individuals who operate as sole proprietors or independent contractors may need an EIN, depending on their circumstances. For example, a sole proprietor who has employees or meets certain IRS requirements will need to obtain an EIN.
Once an EIN has been issued to a business entity, it becomes the permanent federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file federal tax returns, the EIN is never reused or reassigned to another business entity. The IRS cannot cancel an EIN.
Typically, a business cannot verify another company's EIN without consent. The IRS has a policy to protect the master file of EINs. However, there are exceptions, such as when a business needs to verify a supplier’s EIN for tax reporting purposes.
EINs are a key part of managing and identifying your business. It is important to understand their purpose, how to obtain one, and how they are used in the operation of your business. Be sure to keep your EIN confidential and only provide it to entities that require it for legitimate business or tax reporting reasons.