The EIN
Your Business's Federal Tax Identification Number
An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) to identify a business, organization or other entity for federal tax purposes.
LEARN HOW TO GET YOUR EINWhat Is an Employer Identification Number (EIN)?
An Employer Identification Number, commonly called an EIN, is a nine-digit federal tax identification number assigned by the IRS. Businesses, organizations and certain other entities use an EIN to identify themselves when dealing with the federal government and for certain business and financial activities.
An EIN is sometimes referred to as a Federal Employer Identification Number (FEIN) or simply a federal tax ID.
The number follows a format similar to:
An EIN belongs to the business or entity for which it was issued. It is different from an owner's Social Security number and is generally used to identify the business for applicable federal tax and administrative purposes.
Who Needs an EIN?
Whether your business needs an EIN depends on the type of business you operate and the activities your business conducts.
The IRS identifies several situations in which a business or organization needs an EIN. For example, an EIN is generally required when a business has employees or certain federal employment or excise tax obligations.
Partnerships and corporations generally need EINs. A multi-member LLC generally needs its own EIN as well. The rules for a single-member LLC can be different depending on its tax classification and activities.
Businesses and Organizations That May Need an EIN Include:
- Businesses with employees
- Partnerships
- Corporations
- Multi-member LLCs
- Certain tax-exempt organizations
- Businesses required to file certain employment or excise tax returns
- Certain businesses that need an EIN for banking or state requirements
The exact requirements depend on the entity and its circumstances. Always check the current IRS requirements for your particular business.
What About a Single-Member LLC?
A single-member LLC is treated differently for federal income-tax purposes than a multi-member LLC in many circumstances.
If a single-member LLC is treated as a disregarded entity and has no employees or applicable excise-tax obligations, it may not be required to have its own EIN for federal income-tax purposes.
However, a single-member LLC may still obtain an EIN. An EIN may be useful for business banking or other business purposes, and certain state requirements or tax situations may also affect whether an EIN is needed.
Because the rules depend on the business's structure, tax classification and activities, business owners should review their circumstances and consult a qualified tax professional when necessary.
What Does an EIN Confirmation Look Like?
After an EIN is assigned, the IRS provides confirmation of the EIN. The confirmation is important business documentation and should be kept with the company's permanent records.
The IRS now provides eligible Business Tax Account users with a digital CP575 Employer Identification Number Verification Notice. Other methods of EIN confirmation may also be available depending on the situation.
Your City, ST 00000
The document above is an illustrative sample created for educational purposes and is not an IRS-issued document.
Why Is an EIN Important for Your Business?
An EIN can become an important part of the administrative foundation of a business. Depending on your business structure and circumstances, you may use the EIN when interacting with banks, government agencies, tax authorities and other organizations.
Having a federal tax identification number can also help you establish separate business records and conduct certain business activities under the business's identity rather than relying exclusively on the owner's personal tax identification information.
Business Banking
Banks may request an EIN when you apply for a business bank account. Having the appropriate business documentation available can make the account-opening process more organized.
Business Administration
An EIN can be used to identify your business in applicable federal tax and administrative matters.
Employees
Businesses with employees generally need an EIN for federal employment tax purposes.
Business Licenses & Applications
An EIN may be requested as part of certain business license, registration or financial applications.
Can an EIN Help Establish Business Credit?
An EIN identifies your business for federal tax purposes, but simply having an EIN does not automatically create business credit or guarantee that your business will qualify for financing.
Business credit generally develops through the business's financial and credit relationships, reporting activity and other factors.
An EIN can nevertheless be an important piece of the overall business identity that you may use when establishing banking, vendor and credit relationships.
If your goal is to build business credit, you should also learn about business banking, vendor accounts, payment history, business identification information and the requirements of individual lenders and credit providers.
Additional Considerations About the EIN
Getting an EIN is only one part of establishing the administrative foundation of your business. There are several other things business owners should understand about using and maintaining an EIN.
When Is an EIN Required?
The IRS requires an EIN in several circumstances, including when a business has employees, operates as a partnership or corporation, or has certain federal employment or excise tax obligations.
A multi-member LLC generally needs its own EIN. Single-member LLCs have different rules depending on their federal tax classification and activities.
Business Banking
Many banks require or request an EIN when opening a business bank account. The bank may also request formation documents, identification, ownership information and other business records.
Having your EIN and business documents organized can help you prepare for the account-opening process.
Business Identity
An EIN provides a federal identification number associated with your business or organization. It is separate from your personal Social Security number.
Depending on your business structure and tax situation, using the business's appropriate identification information can help keep business records organized.
Privacy and Separation
For certain business activities, an EIN can allow a business to use its federal tax identification number rather than providing the owner's Social Security number.
However, an EIN does not replace your SSN for every purpose. The appropriate taxpayer identification number depends on the transaction and the entity's tax classification.
Employees and Payroll
If your business has employees, an EIN is generally required for federal employment tax purposes.
Businesses with employees also have additional responsibilities regarding payroll, employment taxes, wage reporting and other requirements.
Business Licenses and Applications
Some business licenses, registrations, banking applications and other business services may request an EIN as part of the application.
Requirements vary depending on the state, locality, industry and organization involved.
Business Credit and Financing
An EIN can be part of the business identification information used when establishing financial relationships, but having an EIN alone does not establish business credit or guarantee financing.
Credit providers may consider many other factors, including business history, revenue, credit history, banking relationships, payment history and the provider's own underwriting requirements.
Protect and Store Your EIN Records
Your EIN is an important business record. Keep your EIN confirmation and other tax records in a secure location where you can retrieve them when needed.
You may need the EIN when dealing with banks, tax agencies, lenders, vendors or other organizations.
When Should You Apply for an EIN?
If you are forming an LLC, corporation or partnership, the IRS advises forming the legal entity with the state before applying for the EIN.
This helps ensure that the business information submitted to the IRS matches the legal entity that was created.
What If I Lose My EIN?
If you lose or forget your EIN, the IRS provides several ways to retrieve or confirm it. You may be able to find it on previous tax documents, business records or the notice issued when you originally received the EIN.
The IRS also provides procedures for requesting EIN verification.
How Do You Get an EIN?
The IRS provides a way to apply for an EIN directly. For eligible applicants, the IRS online EIN application is free and can issue the number immediately after the application is successfully completed.
If you are creating an LLC, corporation or partnership, the IRS advises forming the entity with the state before applying for the EIN.
Form Your Business Entity
If you are creating an LLC, corporation or partnership, complete the state formation process first.
Identify the Responsible Party
The EIN application requires information about the responsible party who owns, controls or has authority over the entity.
Complete the EIN Application
Provide the information requested by the IRS and submit the application using the appropriate application method.
Save Your EIN Confirmation
Once your EIN is assigned, keep the confirmation information with your permanent business records.
DIYLLCNow Helps You Understand the EIN Process
The EIN is one of the important pieces of information you may encounter when establishing your business.
At DIYLLCNow, our goal is to help entrepreneurs understand the steps involved in building their businesses rather than simply sending them through a process without understanding what they're doing.
That's why we explain what an EIN is, who may need one, how it fits into your business structure and where you can obtain one.
When you're ready to apply, you can use the IRS's official EIN application process. The IRS does not charge a fee to obtain an EIN directly through its application process.
BUILD YOUR BUSINESS WITH DIYLLCNOWEIN Frequently Asked Questions
What does EIN stand for?
EIN stands for Employer Identification Number.
Is an EIN the same thing as a Social Security number?
No. An EIN is a federal tax identification number used for businesses, organizations and certain other entities. A Social Security number identifies an individual.
How many digits are in an EIN?
An EIN contains nine digits and is commonly displayed in the format 00-0000000.
Does every business need an EIN?
No. Whether an EIN is required depends on the business structure and circumstances. For example, partnerships and corporations generally need EINs, while certain single-member LLCs may not need one for federal income-tax purposes.
Does an EIN establish business credit?
No. An EIN identifies the business for federal tax purposes, but having an EIN alone does not establish business credit or guarantee financing.
Does the IRS charge for an EIN?
No. The IRS provides the EIN application directly and does not charge a fee for obtaining an EIN through its official application process.
Should I form my LLC before applying for an EIN?
If you are creating a legal entity such as an LLC, corporation or partnership, the IRS advises forming the entity with the state before applying for an EIN.
Understand Your EIN. Build Your Business With Confidence.
An EIN is more than a nine-digit number. It can become an important part of your business's administrative and financial foundation. Understanding when you need one and how it fits into your business can help you take the next step with greater confidence.
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