What Is an EIN Number? How to Get an EIN Number

An Employer Identification Number, also known as a Federal Tax Identification Number (FEIN), is a unique nine-digit number the Internal Revenue Service (IRS) assigns to a new business for tax purposes. It serves as a Tax ID number (TIN) similar to, but separate from, your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN). Use your Federal Employer Identification number on your business tax return when you file taxes.

Whether you own a large corporation or a small business, if you have any employees, operate as a partnership, or withhold taxes from income, you’ll need a federal tax ID number for your company. An EIN allows you to:

• Apply for business licenses: Before opening your company, you’ll need a business license to operate legally as a business owner. An EIN allows business owners to apply for necessary licenses from state and federal authorities.
• File a business tax return: Depending on your type of business, an EIN lets you file a separate tax return from your personal taxes. You’ll need an EIN for your tax forms even if your company qualifies for tax-exempt status as a nonprofit organization.
• Open a business bank account or apply for credit: You’ll need an EIN to open a bank account for your company or to apply for a business credit card.
• Protect yourself from liability: Separating your business from your personal finances limits the liability you might experience as the responsible party. An EIN means any financial issues you experience affect your business only, and you can protect your personal assets from lawsuits.
• Reduces risk of identity theft: Unlike your Social Security number, EINs don’t require protection from possible identity thieves, keeping your personal information secure.

The following types of business structures require an EIN Number under certain circumstances:

• Multimember LLC or partnerships: If your company defines itself as a multimember LLC or a partnership, you must have an EIN to file a partnership tax return.
• Nonprofit organizations: Even if your nonprofit business qualifies as tax-exempt, you still must have an EIN to file the proper tax forms.
• S-corporation: If you own an S-Corporation, you run your income through the company’s shareholders for federal tax purposes and need an EIN for these activities.
• Self-employed individuals: Certain self-employed individuals who identify as subcontractors may need an EIN for their employers to process their business income properly.
• Single-member LLC: A single-member LLC means you’ve created a legally distinct line between you and your company, even if you have no employees. If you have even one employee, you must get an EIN. If you don’t have employees or excise tax liability, you do not have to get an Employer Identification Number; however, you may want one to apply for a business bank account or obtain business credit.
• Sole proprietorship: Sole proprietors with one or more employees must get an EIN. If you don’t have employees (or file excise or pension plan tax returns), you do not need an EIN. You can file your taxes as an individual using your Social Security number; however, you may want an EIN anyway to apply for a business bank account or obtain business credit.
• Trusts and estates: Some trusts and estates require EINs for tax purposes.

To obtain a new EIN, download and submit Form SS-4: Application for Employer Identification Number for free on the IRS website (irs.gov) or apply by fax or mail; the IRS will assign you a number immediately. The EIN application asks for information about you and your company, including your legal name, business name, company type, the reason for applying, and a valid taxpayer identification number (such as your Social Security number).

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