How to Get an EIN for Your Business: A Step-by-Step Guide

An Employer Identification Number (EIN) is a Social Security Number for your business. It’s a nine-digit number issued by the Internal Revenue Service (IRS) to identify your business for tax purposes. Think of it as your business’s ID card when dealing with taxes and other official matters.

Getting an EIN is important because it helps your business run legally. It allows you to separate your personal finances from your business finances. An EIN is also necessary if you plan to hire employees or open a business bank account.

From EIN you can build your business’s credibility and take advantage of important benefits like

• Applying for loans
• Setting up business credit.

Having this number can make tax filing much easier and help keep your personal information secure.

What is an EIN?

An Employer Identification Number (EIN) is a special number given to businesses by the Internal Revenue Service (IRS). It is also called a Federal Tax Identification Number. It works like a Social Security Number for your business.

Why is an EIN important?

The EIN is used to identify your business when you deal with the government. It’s how the IRS keeps track of your business for things like that.

• Paying taxes
• Filing returns
• Staying compliant with tax laws.

How does an EIN work?

When you apply for an EIN, your business gets its own unique nine-digit number. This number helps separate your business from others. The IRS uses it to identify your business entity for:

• Paying and filing business taxes
• Applying for business licenses
• Reporting employee wages

An EIN officially recognizes your business. It helps with tasks like opening a business bank account or applying for a business loan.

Having an EIN ensures your business is organized, professional, and ready to grow.

Who needs an EIN?

Not every business needs an Employer Identification Number (EIN), but many do. The IRS requires certain types of businesses to have an EIN for tax and legal purposes. Let’s look at which businesses need an EIN and why.

Types of Businesses That Need an EIN

1. Corporations
   • All corporations, whether large or small, must have an EIN to file taxes and handle payroll.
2. Partnerships
   • Partnerships always require an EIN. Because they involve two or more individuals who share the business.
3. LLCs with Multiple Members
   • If your Limited Liability Company (LLC) has more than one owner. You will need an EIN to manage taxes and business accounts.
4. Sole Proprietors with Employees
   • If you’re a sole proprietor and hire employees. The IRS requires you to get an EIN to report employee wages and handle payroll taxes.
5. Non-Profit Organizations
   • Nonprofits need an EIN to apply for tax-exempt status and manage donations or grants.

When sole proprietors may need an EIN.

Even if you’re a sole proprietor without employees, getting an EIN can still be helpful. Here are some reasons:

• Opening a business bank account keeps personal and business finances separate.
• Building business credit for loans or credit cards.
• Applying for local or state business licenses.
• Protecting your Social Security number (SSN) by using an EIN for tax filings.

Why an EIN matters

Having an EIN makes your business look more professional and organized. It also keeps your finances in order and simplifies tasks like filing business taxes or hiring employees. Even if it isn’t required, getting an EIN can benefit your business in many ways.

When is an EIN required?

There are certain times when you must have an Employer Identification Number (EIN) for your business. Whether it’s for handling employees, taxes, or financial tasks, the IRS requires an EIN in specific situations.

1. Hiring Employees

If your business plans to hire employees, you’ll need an EIN to:

• Report employee wages to the IRS.
• File employment taxes, such as Social Security and Medicare.
• Handle payroll legally.

2. Opening a Business Bank Account

Most banks must have an EIN to open a business bank account. Having a separate account for your business:

• Keep your personal finances separate from business funds.
• Making tracking of income and expenses easier for tax.

3. Applying for Business Licenses

Many state and local governments ask for an EIN when you apply for certain business licenses or permits. It’s a way to ensure that your business is registered and operating legally.

4. Filing Employment Taxes

When you hire employees, the IRS requires you to file employment-related taxes. An EIN is essential for:

• Withholding taxes from employees’ paychecks.
• Filing quarterly and annual tax forms.

5. Establishing a Business Credit Profile

If you want to build business credit, you’ll need an EIN. A strong credit profile can help your business:

• Qualify for loans or lines of credit.
• Get better terms on business credit cards.

Why it is important.

Having an EIN in these situations makes your business more professional and compliant with tax laws. It also simplifies many tasks, from paying taxes to growing your business through credit opportunities.

How to Apply for an EIN

Getting an Employer Identification Number (EIN) is an important step for your business. There are several ways to apply, and each method has its own process and timeline. Here’s how you can apply for an EIN:

a. Online Application

The easiest and fastest way to get an EIN is through the IRS’s online application.

• Visit the IRS EIN application portal during its available hours (Monday to Friday, 7:00 a.m. to 10:00 p.m. Eastern Time).
• Fill out the required information about your business.
• Submit the form, and you’ll receive your EIN immediately upon completion.

This method is ideal for most U.S.-based businesses because it is quick and efficient.

b. Application by Fax

If you prefer, you can apply for an EIN by faxing Form SS-4 to the IRS.

• Download and complete Form SS-4 from the IRS website.
• Fax the form to the appropriate IRS office based on your location.
• Processing usually takes about four business days, and you will receive your EIN via fax.

This method is great for those who can’t access the online application.

c. Application by Mail

Another option is applying by mail. While it takes longer, it’s still a valid way to get your EIN.

• Complete and print Form SS-4 from the IRS website.
• Mail the form to the designated IRS address for your state.
• Processing time is approximately four weeks, and you will receive your EIN by mail.

This method is useful if you prefer paper-based applications or have no access to a fax or the internet.

d. Application by Telephone (for International Applicants)

If you’re an international business owner, you can apply for an EIN by calling the IRS directly.

• Call the IRS at +1-267-941-1099 during its operating hours (Monday to Friday, 6:00 a.m. to 11:00 p.m. Eastern Time).
• Provide your business details over the phone.
• Your EIN will be assigned during the call.

This option is specific to businesses operating outside the U.S.

Why Choose the Right Method?

Selecting the best method to apply for your EIN depends on your needs and timeline. The online application is the fastest, while fax and mail applications are suitable for those who prefer offline options. International applicants have the flexibility to apply via phone for convenience.

Information Required for an EIN Application

Before applying for an Employer Identification Number (EIN). You need to gather important details about your business. Having this information ready makes the process faster and easier. Here’s what you’ll need:

1. Legal Name and Trade Name of the Business

• Provide the legal name of your business as it appears in official documents.
• If your business operates under a different name, include the trade name or “Doing Business As (DBA)” name.

2. Responsible Party’s SSN or ITIN

• The responsible party is the person who controls or manages the business.
• You will need Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

3. Business Address and Contact Information

• Enter your business’s physical address, including street, city, state, and ZIP code.
• Provide accurate contact details, such as a phone number or email address, so the IRS can reach you if needed.

4. Type of Entity

• Identify the business entity type, such as:
  • Sole Proprietorship
  • Partnership
  • Corporation
  • Limited Liability Company (LLC)
  • Non-Profit Organization
• This information determines the tax requirements for your business.

5. Reason for Applying

• Specify why you are applying for an EIN. Common reasons include:
  • Starting a new business
  • Hiring employees
  • Opening a business bank account
  • Changing the structure of your business.

Why This Information Matters

Providing the correct information ensures your application is processed accurately. Double-check all details before submitting to avoid delays or complications with the IRS.

Having your legal name, responsible party details, and business type makes the process smooth.

Common Mistakes to Avoid When Applying for an EIN

Applying for an Employer Identification Number (EIN) is simple, but mistakes can cause delays. Here are some common errors to watch out for and how to avoid them:

1. Applying Too Early

A common mistake is applying for an EIN before forming your business.

• The IRS requires your business structure, such as a corporation, partnership, or LLC, to be officially established first.
• Applying prematurely may result in an invalid EIN, requiring you to reapply later. Tip: Complete your business formation documents before starting the EIN application process.

2. Providing Incorrect Information

Errors in your application, such as:

• Misspelling the legal name or trade name of your business.
• Entering the wrong Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
• Using an outdated or incorrect business address. These mistakes can delay your application or cause legal issues later. Tip: Double-check all details for accuracy before submitting your application.

3. Using Unauthorized Third-Party Services

Some applicants use unauthorized services that charge fees to apply for an EIN.

• The IRS EIN application is a free service.
• Many third-party websites claim to assist but charge unnecessary fees. Tip: Always apply directly through the IRS to avoid extra costs and ensure your information is secure.

Why Avoiding Mistakes Matters

Taking the time to avoid these errors will help you get your EIN quickly. Ensure your business is legally formed, provide accurate details, and use the free IRS application portal for the best experience. This will save you time, money, and unnecessary stress.

After receiving your EIN

When you receive your Employer Identification Number (EIN). It is important to take the next steps to keep your business on track. Here’s what you should do after getting your EIN:

1. Update Your Business Records

Now that you have your EIN, make sure to:

• Update your business records to include the new number.
• Store it in a safe, easily accessible place for future reference. This will help keep everything organized and ready for tax season or business filings.

2. Use the EIN for Tax Filings and Opening Bank Accounts

Your EIN will be needed for:

• Filing business taxes with the IRS.
• Opening a business bank account. Many banks must an EIN to create an account in your business’s name.
• Hiring employees and paying payroll taxes.

Make sure to use the EIN when handling any official financial matters for your business.

3. Safeguard the EIN to Prevent Identity Theft

Your EIN is a sensitive piece of information. Protect it by:

• Keeping your EIN in a secure place, like a locked file or a password-protected document.
• Avoid sharing it publicly unless necessary, especially on websites or social media.
• Only provide it to trusted parties, like banks or tax professionals, when needed.

Tip: Like your Social Security Number (SSN), your EIN can be misused if it falls into the wrong hands. Treat it carefully to avoid identity theft or fraud.

Why These Steps Matter

Taking these actions ensures your business stays compliant, safe, and organized. By using your EIN for taxes, banking, and keeping it secure. You can focus on growing your business without worrying about future problems.

Frequently Asked Questions

Here are some common questions about getting an Employer Identification Number (EIN).

1. Can I use my personal SSN instead of an EIN?

• No, you cannot use your personal Social Security Number (SSN) in place of an EIN for your business.
• An EIN is specifically for business purposes, while your SSN is for personal use.
• If you have a business (like a corporation, LLC, or partnership). You need a separate EIN to handle taxes, hire employees, and open business accounts.

2. Do I need a new EIN if my business structure changes?

• Yes, if your business structure changes, you may need a new EIN.
• For example, if your sole proprietorship changes to an LLC or a corporation, you will need to apply for a new EIN.
• But, if you are making minor changes (like changing your business name or address), you may not need a new EIN.

3. Is there a cost associated with obtaining an EIN?

• No, getting an EIN is completely free!
• The IRS provides the EIN application service at no charge.
• Be cautious of third-party websites that may charge fees to apply for an EIN. This is unnecessary since you can get your EIN directly from the IRS for free.

Final Thoughts:

Getting an Employer Identification Number (EIN) is an important step for your business. It is required for things like paying taxes, hiring employees, and opening a business bank account. Without it, your business might face delays or legal issues.

Why EIN is important.

• EIN helps keep your business finances separate from your personal finances, making tax time easier.
• It is necessary for hiring employees and filing business taxes with the IRS.
• You’ll need it to open a business bank account and apply for business licenses.

Apply for your EIN quickly.

It’s a good idea to apply for your EIN as soon as you start your business. Doing this early ensures you can handle taxes, hiring staff, and setting up your business accounts without delays.

Take Action Now!

By getting your EIN now, you’ll stay compliant with the IRS and set up your business for success. Don’t wait—apply for your EIN today!