What Is an EIN? A Complete Guide to Employer Identification Numbers

An Employer Identification Number is one of the first things most businesses need after formation. This guide explains what an EIN is, who needs one, how to apply, and what to keep in mind as your business grows. Whether the IRS requires an EIN for your entity type or you are applying for practical reasons like banking and privacy, understanding the process helps you move forward with confidence.

Eco-fyle’s EIN Filing service handles the application on your behalf, ensuring accuracy and timely submission to the IRS.

What Is an EIN?

An EIN, or Employer Identification Number, is a unique nine-digit number assigned to a business by the IRS. It is also referred to as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number. The format is xx-xxxxxxx, compared to the xxx-xx-xxxx format of a Social Security Number.

An EIN functions for a business the same way a Social Security Number functions for an individual. It is the number the IRS uses to identify your business on tax filings, financial accounts, and government documents. Every EIN is unique, and no two businesses share the same number. Once assigned, an EIN is permanent. It stays with the business for its entire existence and remains on file with the IRS even after the business closes.

It is important to understand that an EIN is not a business entity. It does not create an LLC, corporation, or any other business structure. It is a tax identification number that the IRS assigns to businesses that have already been formed or are in the process of forming. In most cases, businesses should complete their state formation filing before applying for an EIN.

An EIN is also separate from any state tax identification numbers your business may need. Many states issue their own tax ID numbers for state income tax, sales tax, and employer withholding purposes. These are obtained through your state’s tax agency and are not the same as your federal EIN.

Who Needs an EIN?

The IRS requires certain businesses and organizations to have an EIN. All business entities that have employees must obtain one, regardless of entity type. Businesses that file taxes as a corporation or partnership also need an EIN, even if they have no employees.

Specifically, the IRS requires an EIN for:

• Corporations (including S corporations and C corporations)
• Partnerships
• Multi-member LLCs (taxed as partnerships by default)
• Single-member LLCs that elect to be taxed as a corporation
• Any business with employees
• Businesses that file employment, excise, or alcohol, tobacco, and firearms tax returns
• Businesses that withhold taxes on income paid to nonresident aliens
• Businesses that have a Keogh plan
• Nonprofit organizations
• Trusts (except certain grantor-owned revocable trusts and IRAs)
• Estates
• Farmers’ cooperatives

If your business falls into any of these categories, obtaining an EIN is not optional. It is a federal requirement.

It is also worth noting that nonprofit organizations must obtain an EIN, but receiving an EIN does not grant tax-exempt status. Tax-exempt status requires a separate application to the IRS using Form 1023 or Form 1023-EZ. Once an EIN is issued, the organization is subject to IRS rules regarding annual filings, regardless of whether the tax-exemption application has been approved.

When an EIN Is Not Required

Sole proprietorships without employees are generally not required to have an EIN. For IRS purposes, this includes self-employed individuals and single-member LLCs that are taxed as sole proprietorships. The IRS treats single-member LLCs as “disregarded entities,” meaning the business is not recognized as separate from its owner for federal tax purposes. These business owners can use their personal Social Security Number on federal tax filings instead of an EIN.

There are exceptions. Even without employees, a sole proprietor or single-member LLC will need an EIN if the business files excise tax returns, has a Keogh retirement plan, or withholds taxes on income paid to a nonresident alien. These situations trigger the EIN requirement regardless of entity type or number of employees.

However, even when an EIN is not technically required by the IRS, there are practical reasons to obtain one. Many banks require an EIN to open a business bank account, even for sole proprietors. An EIN also reduces the need to share your Social Security Number on business documents, contracts, W-9 forms, and tax forms sent to clients. For sole proprietors who work with multiple clients or vendors, this can be an important privacy consideration.

Benefits of Having an EIN

Even if your business is not required to have an EIN, there are several advantages to obtaining one.

Separation of personal and business finances. An EIN allows you to open business bank accounts and credit cards under your business identity rather than your personal Social Security Number. This separation simplifies accounting and provides a clearer financial picture of your business.

Privacy protection. Business owners who work with multiple clients, vendors, or contractors may need to share their tax identification number on invoices, W-9 forms, and other documents. Using an EIN instead of a Social Security Number reduces exposure to identity theft.

Building business credit. An EIN is necessary to establish a credit profile for your business. Lenders and credit agencies use the EIN to track your business’s credit history separately from your personal credit. A strong business credit profile can support future financing and growth.

Professional credibility. Having an EIN signals that your business is properly registered and operating in compliance with federal requirements. This can be important when entering into contracts, applying for permits, or working with larger organizations that require vendor credentials.

Preparedness for growth. If your business plans to hire employees, bring on partners, or change its tax structure in the future, having an EIN already in place eliminates a step in that process.

How to Apply for an EIN

The IRS does not charge a fee to apply for an EIN. There are four ways to submit an application, and the method you choose determines how quickly you receive your number.

Method	How It Works	Processing Time	Availability
Online	Complete the IRS EIN Assistant on the IRS website. Must be finished in one session.	Immediate	Monday through Friday, 7 a.m. to 10 p.m. EST. U.S.-based businesses only.
Phone	Call the IRS Business and Specialty Tax Line at 800-829-4933. An agent completes the application with you.	During the call	Monday through Friday, 7 a.m. to 7 p.m. local time. Available to international applicants.
Fax	Submit a completed Form SS-4 by fax. Include a return fax number.	4 business days	Available to all applicants.
Mail	Mail a completed Form SS-4 to the IRS.	Approximately 4 weeks	Available to all applicants.

If the online application returns an error message, it does not necessarily mean there is a problem with your application. The online system cannot process all applications. In that case, submit Form SS-4 by fax or mail instead.

Regardless of the method, the IRS will issue an EIN Confirmation Notice once the application is approved. This notice should be stored with your business records, as it serves as the official documentation of your assigned EIN.

Information Required to Apply

Before starting the application, gather the following information. If you are applying online, the application must be completed in one session, so having everything ready in advance is important.

• The legal name of the business as registered with the state
• The trade name or DBA, if applicable
• The business mailing address and physical street address (if different)
• The county and state where the principal place of business is located
• The name and taxpayer identification number (SSN, ITIN, or EIN) of the responsible party
• The number of LLC members (for LLCs)
• The business structure for federal tax purposes
• The state or country of incorporation (for corporations)
• The reason for applying (starting a new business, hiring employees, banking, etc.)
• The date the business was started or acquired
• The expected number of employees and the date wages will first be paid
• The type of business or industry

The responsible party is the individual who owns or controls the business and is responsible for managing its financial affairs and assets. The IRS requires that the responsible party be an individual, not another business entity. This is a common point of confusion for multi-member LLCs and corporations where ownership may be held by another entity. Regardless of how the business is structured, an actual person must be named as the responsible party on the application.

The IRS limits EIN issuance to one per responsible party per day. If the responsible party for your business changes after the EIN has been issued, you must notify the IRS by filing Form 8822-B to update the information on file.

When You Need a New EIN

Certain changes to a business’s ownership or structure require a new EIN. The original EIN cannot be transferred or reused when the fundamental nature of the entity changes.

Business Type	You Need a New EIN When
Sole proprietorship	You incorporate, form a partnership, or purchase an existing business
Partnership	The structure changes, or a partner purchases the business and operates it as a sole proprietorship
Corporation	You receive a new charter, become a subsidiary, or form a new corporation after a merger
LLC	A single-member LLC adds members, or the LLC converts to a corporation

In each of these cases, the change creates what the IRS considers a new entity, which requires its own EIN.

When You Do Not Need a New EIN

Not every business change requires a new EIN. The following changes can be reported to the IRS without applying for a new number.

• Changing the name of your business
• Changing the location or address of your business (report using Form 8822-B)
• A corporation or partnership declaring bankruptcy
• Electing S corporation tax status
• Changing how your business entity is taxed (report using Form 8832)

If you are unsure whether a change to your business requires a new EIN, contact the IRS or consult a tax professional.

What to Do If You Lose Your EIN

An EIN is permanently assigned to your business and cannot be canceled, reused, or reassigned. If you lose track of your EIN, there are several ways to recover it.

Check your original EIN Confirmation Notice. When the IRS first issued your EIN, it sent a confirmation notice to the address on file. This is the most direct record of your number.

Review previously filed tax returns. Your EIN appears on every federal tax return filed by the business, as well as on any W-2s or 1099s the business has issued.

Check IRS correspondence. Any letters, notices, or documents the IRS has sent to your business will include your EIN.

Contact your bank or licensing agency. If you used your EIN to open a business bank account, apply for a state or local license, or register for a state tax account, those institutions will have your EIN on file.

Call the IRS Business and Specialty Tax Line. If none of the above options produce your EIN, call 800-829-4933, Monday through Friday, 7 a.m. to 7 p.m. local time. After verifying your identity and authorization, an agent will provide your EIN over the phone.

Key Takeaways

1. An EIN is a nine-digit number the IRS assigns to identify your business for tax purposes. It is used for tax filings, banking, payroll, licensing, and credit applications. It is separate from any state tax ID numbers your business may need.

2. Most businesses are required to have an EIN. Corporations, partnerships, multi-member LLCs, and any business with employees must obtain one. Nonprofit organizations also need an EIN, though it does not grant tax-exempt status.

3. Sole proprietors without employees are not required to have an EIN but may benefit from one. An EIN protects personal privacy, supports business credit, and is often required by banks.

4. The IRS issues EINs at no cost. The fastest method is the online application, which provides the EIN immediately. Form SS-4 can be used for fax or mail applications.

5. Certain changes to your business require a new EIN. Changes to ownership or entity structure create a new entity in the eyes of the IRS, which requires its own number.

6. Your EIN is permanent. It cannot be canceled, reused, or reassigned. If lost, it can be recovered through your records, your bank, or the IRS directly.

Ready to Get Your EIN? Eco-fyle Is Here to Help

An EIN is one of the first steps in establishing your business with the IRS. Whether you are forming a new entity, hiring your first employee, or opening a business bank account, having your EIN in place ensures you are ready to operate.

Eco-fyle’s EIN Filing service handles the application process on your behalf. Backed by over 20 years of business compliance experience through Eco-Tax, we ensure your application is accurate and complete. We handle the details so you can focus on building your business.

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