Starting or running a business in the United States involves several legal and administrative steps. One of the most crucial identifiers for any U.S. business is the EIN, or Employer Identification Number, also referred to as a Federal Tax Identification Number. Issued by the Internal Revenue Service (IRS), the EIN is essential for taxation, hiring employees, banking, and business operations.
In this guide, we’ll cover everything you need to know about the EIN — what it is, who needs it, how to get it, and how to use it legally and effectively.
1. What Is an EIN?
The Employer Identification Number (EIN) is a unique 9-digit number assigned by the IRS to identify a business entity for tax purposes. It is like a Social Security Number (SSN), but for businesses.
Format Example: 12-3456789
Key Facts:
- Issued by the Internal Revenue Service (IRS)
- Used for business taxation, hiring employees, opening a business bank account
- Sometimes called a Federal Tax ID or Federal EIN Number
2. Who Needs an EIN?
Not every business needs an EIN, but many do. According to the IRS, you are required to get an EIN if you:
✅ Must Have an EIN If You:
- Have employees
- Operate your business as a corporation or partnership
- File employment, excise, or alcohol, tobacco, and firearms tax returns
- Withhold taxes on income (other than wages) paid to a non-resident
- Use a Keogh plan (a retirement plan for self-employed individuals)
- Are involved with estates, trusts, or nonprofits
Optional (But Recommended) for:
- Sole proprietors who want to separate business and personal finances
- LLCs with only one member (unless they hire employees or choose corporate taxation)
- Freelancers and independent contractors to use instead of their SSN
- Foreign nationals starting a U.S. business
3. Why You Need an EIN
1. Hiring Employees
If your business plans to hire staff, the IRS requires an EIN for payroll and tax reporting purposes.
2. Opening a Business Bank Account
Most U.S. banks require an EIN to open a business checking account.
3. Filing Taxes
Corporations, partnerships, and multi-member LLCs must use an EIN to file their federal and state tax returns.
4. Building Business Credit
An EIN is necessary to establish business credit, separate from your personal credit.
5. Applying for Licenses and Permits
Many state and local agencies require an EIN when applying for business licenses.
4. How to Apply for an EIN
✅ Free of Cost:
The IRS issues EINs for free. Be cautious of third-party websites charging fees.
✅ Application Methods:
| Method | Processing Time |
|---|---|
| Online (U.S. only) | Immediate (same day) |
| Fax | 4–5 business days |
| Up to 4 weeks | |
| Phone (international) | Immediate (with call wait time) |
1. Online Application (Most Recommended)
- Visit: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
- Available for businesses with a legal residence in the U.S.
- Only one application per day per person allowed
2. Fax or Mail
- Complete IRS Form SS-4
- Fax or mail it to the IRS depending on your location
- For international applicants, fax is preferred for faster processing
3. Phone (International Applicants Only)
- Call IRS International EIN Department: +1-267-941-1099 (Not toll-free)
- Hours: Monday to Friday, 6:00 AM – 11:00 PM (Eastern Time)
- You’ll be issued an EIN during the call if you have all required information
5. What Information Is Needed to Apply?
- Legal name and address of the business
- Type of entity (LLC, Corp, Partnership, etc.)
- Name and SSN or ITIN of the responsible party (the person who owns or controls the entity)
- Reason for applying (e.g., starting a new business, hiring employees)
- Expected number of employees and first wages paid
- Principal business activity and products/services offered
6. EIN for Foreign Nationals and Non-U.S. Residents
Yes, foreign individuals and companies can get an EIN even without a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Steps:
- Fill out IRS Form SS-4
- Enter “N/A” in the SSN field
- Fax to: +1-304-707-9471 or call +1-267-941-1099
- A U.S. address is helpful but not always mandatory
- It’s advisable to have a U.S.-based representative or agent for mail purposes
7. What Does the EIN Look Like?
Your EIN will be in the format:
XX-XXXXXXX
Example: 12-3456789
It will be delivered to you on a confirmation notice (CP 575), which serves as proof of your EIN. Keep this document safe for bank and tax purposes.
8. EIN vs SSN vs ITIN vs TIN
| Type | Full Name | Who Uses It | Purpose |
|---|---|---|---|
| EIN | Employer Identification Number | Businesses | Tax filing, hiring, banking |
| SSN | Social Security Number | U.S. Citizens/Residents | Personal identification, taxes, employment |
| ITIN | Individual Taxpayer Identification Number | Non-residents/Foreigners | Tax reporting for individuals |
| TIN | Taxpayer Identification Number | Generic term | Includes SSN, ITIN, EIN |
9. When Will You Use Your EIN?
You will use your EIN in many legal, financial, and tax-related scenarios:
- Filing federal and state taxes
- Submitting W-2s and 1099s
- Payroll and employee reporting
- Opening PayPal or Stripe business accounts
- Applying for DUNS Number and business credit
- Registering for state sales tax or reseller certificates
10. What If You Lose Your EIN?
If you lose your EIN, you can:
- Check your original IRS confirmation notice (CP 575)
- Look on prior tax returns or business licenses
- Call the IRS Business & Specialty Tax Line at 800-829-4933 (Mon–Fri, 7am–7pm local time)
11. Can EINs Be Reused?
No. EINs are unique to each entity and never expire. Even if your business closes, the EIN remains assigned to that legal entity. It can’t be transferred or reused for a new business.
12. Changing or Cancelling an EIN
You cannot change your EIN, but you may need to apply for a new one if:
- You form a new corporation or LLC
- You change from a sole proprietorship to a partnership
- You inherit or acquire another business
You can cancel an EIN by sending a written request to the IRS, but the number will remain permanently assigned.
13. EIN and State-Level Requirements
While the EIN is issued by the federal government, you may also need to register for:
- State income tax
- Sales tax
- Franchise tax
- State employer tax
Each state has its own procedures and departments (e.g., California’s CDTFA or Texas Comptroller of Public Accounts).
Conclusion
An Employer Identification Number (EIN) is more than just a tax ID—it’s a critical identifier for your business’s financial and legal activities. Whether you’re starting a new LLC, hiring your first employee, or opening a business bank account, getting an EIN is usually the first major step after registering your business.
The process is simple, free, and often immediate if done online. It’s also available to international applicants. Make sure you understand how and when to use your EIN to stay compliant with IRS regulations and ensure your business runs smoothly.