An employer identification number, or EIN, is a federal tax ID number for businesses, according to the IRS. You can get one directly from the IRS in minutes, and it costs nothing. Some websites charge for the same service, and you never need to pay them.
Do you need one?
The IRS says you need an EIN if you have employees or will pay employment or excise taxes. Its application page adds that you generally need one to operate a partnership or corporation, to pay sales and excise taxes, and to change business structures or ownership.
A sole proprietor with no employees may not need one for federal tax purposes. Even then, the IRS notes that you can still request one for banking or state tax purposes, and the SBA says you can open a business bank account once you have your federal EIN. Our guide to the separate business bank account explains why that matters.
Form your entity first
If you are forming an LLC, partnership, corporation, or tax-exempt organization, the IRS says to form the entity through your state before you apply. Applying first can delay your application. If you are still deciding, read our guide to choosing a business structure before you go further.
What you need to apply online
- Your business entity type.
- The Social Security number or taxpayer ID number (ITIN) of the responsible party who controls the business.
- A principal place of business in the U.S. or U.S. territories.
The IRS explains that the online application has to be finished in one session, because it cannot be saved, and that it expires after 15 minutes of inactivity. It also allows only one EIN per responsible party per day. The tool is not available around the clock, so check the IRS page for its current days and hours before you sit down. When the application is approved, the IRS issues your EIN immediately online, and you should print the confirmation letter for your records.
Other ways to apply
You can also fax or mail Form SS-4. According to the IRS, a faxed application gets a reply in about four business days if you provide a fax number, and a mailed application takes approximately four weeks. If your principal place of business is outside the U.S., the IRS lists phone and fax options on the same EIN page.
Skip the paid middlemen
The IRS warns that some websites charge for an EIN, and it says you never have to pay a fee to get one. Start from IRS.gov, and check that the web address ends in .gov before you enter any personal information.
What to do after you have it
- Save the confirmation letter somewhere safe and keep a digital copy.
- Use it to open a business bank account.
- Keep it handy for business license applications, which SCORE says you should prepare for by first obtaining a federal tax ID number.
- Learn how it fits into your federal tax obligations, and read about hiring your first help if employees are in your plans.
An EIN belongs to the business, but the application asks for a responsible person’s tax ID, so treat the confirmation letter as private. Do not post it publicly or send it in unsecured messages.
Your next step
Once your structure and name are settled, set aside twenty minutes with your paperwork in front of you. Apply on the IRS website, print the confirmation, and file it with your other business records. Our guide to choosing and protecting your business name can help if the name is still open.