Starting a business in the United States involves more than just launching a website or selling a product. One of the most important steps is obtaining an EIN – Employer Identification Number from the Internal Revenue Service (IRS). Whether you’re a sole proprietor, LLC, partnership, or corporation, an EIN is often essential for tax, banking, and legal purposes.
In this article, we’ll cover everything you need to know about getting an EIN: what it is, who needs it, how to apply, and why it matters.
What Is an EIN?
EIN (Employer Identification Number), also known as a Federal Tax Identification Number, is a nine-digit number (like 12-3456789) issued by the IRS to identify a business for tax purposes.
It functions like a Social Security Number (SSN) for businesses. Just like individuals have SSNs, businesses use EINs to file taxes, open bank accounts, and hire employees.
Who Needs an EIN?
Not all businesses require an EIN, but many do. You must get an EIN if your business:
- Has employees
- Operates as a corporation or partnership
- Files employment, excise, or alcohol/firearms/tobacco tax returns
- Withholds taxes on income (other than wages) paid to a non-resident alien
- Has a Keogh plan (a tax-deferred pension plan)
- Involves a multi-member LLC
- Applies for certain business licenses or permits
Even if you’re a sole proprietor with no employees, you might still need an EIN for banking, privacy, or to establish credibility.
Why You Should Get an EIN
Even if you’re not required to get an EIN, it can offer several benefits:
1. Open a Business Bank Account
Most banks require an EIN to open a business checking account. Keeping business and personal finances separate helps with accounting and legal protection.
2. Build Business Credit
An EIN helps establish a business credit profile separate from your personal credit. This is important if you plan to seek loans or financing in the future.
3. Hire Employees
As the name suggests, an Employer Identification Number is mandatory if you plan to hire staff and file payroll taxes.
4. Improve Professionalism
Using an EIN instead of your Social Security Number shows clients and vendors that you’re operating a legitimate business.
5. Required for Some Licenses and Permits
Many state and federal licenses require an EIN, especially if you operate in a regulated industry.
How to Apply for an EIN
The process is free, straightforward, and handled entirely through the IRS. There are several ways to apply:
1. Online Application (Recommended)
This is the fastest and most convenient method.
- Go to the official IRS EIN portal: https://irs.gov
- Apply Monday to Friday, 7 a.m. to 10 p.m. EST
- You must complete the application in one session (it cannot be saved)
- You’ll receive your EIN immediately after submitting the application
Eligibility:
- You must have a valid Taxpayer Identification Number (SSN, ITIN, or EIN)
- The business must be located in the U.S. or its territories
2. Apply by Fax
- Download Form SS-4 from the IRS website
- Fill it out and fax it to the correct number (based on your location)
- If you include a return fax number, you’ll usually get your EIN in 4–7 business days
3. Apply by Mail
- Mail the completed Form SS-4 to the IRS
- Processing typically takes 4–6 weeks
Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
4. Apply by Phone (For International Applicants Only)
If you’re a non-U.S. resident without a legal residence in the U.S., you can call the IRS to apply:
Phone: +1-267-941-1099 (Not toll-free)
Hours: Monday–Friday, 6 a.m. to 11 p.m. Eastern Time
How to Fill Out Form SS-4
Here are some important parts of Form SS-4 and how to fill them:
- Line 1: Legal name of your business
- Line 2: Trade name or “Doing Business As” name
- Line 4 & 5: Business address
- Line 8a: Choose the type of entity (LLC, corporation, partnership, etc.)
- Line 10: Reason for applying (e.g., starting a new business, hiring employees)
- Line 11: Date business started
- Line 12: Closing month of accounting year (usually December)
- Line 16: Type of business activity (e.g., retail, construction, software)
- Signature: Must be signed by the responsible party (owner or officer)
Make sure the information is accurate to avoid delays.
How Long Does It Take to Get an EIN?
- Online: Instantly
- Fax: 4–7 business days
- Mail: 4–6 weeks
- Phone (non-U.S. applicants): During the call
What Happens After You Get an EIN?
Once your EIN is issued:
- Keep a digital and printed copy for your records
- Use it for all business-related tax forms (federal and state)
- Provide it when opening bank accounts, applying for loans, or filing payroll taxes
Remember: Your EIN is permanent and doesn’t expire. However, if you change your business structure (e.g., from sole proprietor to LLC), you may need a new EIN.
When Do You Need a New EIN?
You may need to apply for a new EIN if:
- You change your business structure (e.g., sole proprietor to corporation)
- You inherit a business
- You create a new LLC with different partners
- A corporation becomes a partnership or vice versa
In most cases, changing your business name or address does not require a new EIN — just notify the IRS.
EIN vs SSN vs ITIN – What’s the Difference?
| Number Type | Used For | Who Gets It |
|---|---|---|
| SSN (Social Security Number) | Personal taxes | U.S. citizens and permanent residents |
| ITIN (Individual Taxpayer Identification Number) | Tax filing by non-residents | Non-citizens not eligible for SSN |
| EIN (Employer Identification Number) | Business identification | Businesses (LLCs, corporations, etc.) |
Common EIN Mistakes to Avoid
- Using third-party services that charge money – EINs are free from the IRS
- Applying for the wrong entity type – Know whether you are an LLC, sole prop, or corp
- Entering incorrect business names or SSNs
- Losing your EIN letter (CP 575) – Save and back it up; it’s needed for banking and taxes
Conclusion
Getting an EIN from the IRS is one of the first and most important steps in launching a U.S.-based business. Whether you’re forming an LLC, hiring employees, or opening a business bank account, the EIN will serve as your business’s tax ID and identity.
It’s easy to apply online, completely free, and typically takes less than 15 minutes. By securing your EIN, you set your business up for smooth operations, legal compliance, and long-term growth.
If you’re unsure about the process or your entity type, consider speaking with a business attorney or accountant to get it right the first time.