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

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An employer identification number (EIN) is a unique nine-digit number the Internal Revenue Service assigns to a business or other entity so it can be identified on tax returns, payroll filings and other official documents. It is written in the format XX-XXXXXXX and is also called a federal tax identification number, a federal employer identification number (FEIN) or, informally, an “EIN number.” Despite the name, it is not limited to employers. Many businesses with no staff, as well as trusts, estates and nonprofits, have one. Applying is free, and an online application is usually approved on the spot.

How an EIN Works

The IRS uses the EIN to match filings, payments and correspondence to a specific entity. Once assigned, the number belongs to that entity permanently: it does not expire and is never handed to a different business, even if the company shuts down.

An EIN is also not treated as sensitive in the way a Social Security number is. Businesses routinely print it on invoices, tax forms they issue to contractors, and public filings.

Who Can Get an EIN

The IRS issues EINs to a wide range of entities, including:

• Sole proprietorships
• Limited liability companies (LLCs)
• Corporations, including S corporations and personal service corporations
• Partnerships
• Nonprofit organizations, churches and church-controlled organizations
• Trusts and estates
• Plan administrators
• Government agencies, military entities, and Indian tribal governments and enterprises
• Farmers’ cooperatives
• Real estate mortgage investment conduits (REMICs)

When an EIN Is Required

The IRS requires an EIN if the business or entity:

• Has any employees
• Operates as a corporation or a partnership
• Files employment, excise, or alcohol, tobacco and firearms tax returns
• Withholds taxes on income other than wages paid to nonresident aliens
• Has a Keogh plan
• Is involved with certain types of organizations, such as trusts, estates and nonprofits

A sole proprietor with no employees who files none of those returns can generally report business income under their own Social Security number.

Changes That Require a New EIN

Because the EIN is tied to a specific entity, a change in ownership structure can require a new number. A sole proprietor who incorporates, for example, must apply for a new EIN for the corporation. Likewise, if a buyer forms or uses a different entity, that entity needs its own EIN, and records filed under the seller’s number continue to point to the seller.

How to Get an EIN

Every application uses Form SS-4, Application for Employer Identification Number, which is available on the IRS website. The online application asks the same questions as the paper form.

What the Application Asks For

The IRS requires the name and personal taxpayer identification number (typically an SSN or ITIN) of the “responsible party,” such as the principal officer, general partner, grantor, trustor or owner. The form also asks for:

• The type of entity (sole proprietorship, LLC, corporation, partnership, trust and so on)
• The reason for applying, such as starting a new business, a change of organization or compliance with IRS withholding requirements
• The start date or acquisition date of the business
• The principal industry or line of business

The responsible party must be an individual, not another entity, unless the applicant is a government entity. A company cannot list a holding company as its responsible party, for instance; a person who controls the business must be named.

Ways to Apply

All methods are free. Third-party services that charge to “file your EIN” are submitting the same Form SS-4 that you can file yourself at no cost.

Why an EIN Matters

For many businesses, an EIN is a practical prerequisite for operating. It is used to:

• Hire and pay employees, since payroll tax filings are reported under the employer’s EIN
• Open business bank accounts, obtain credit and invest surplus cash, as banks generally ask for the entity’s EIN to open accounts in the business’s name
• File federal business tax returns and register for state taxes
• Keep business and personal finances separate, which helps maintain the separation an LLC or corporation depends on

The EIN also protects personal information. Independent contractors who are asked to fill out a W-9 form by the companies that pay them can enter an EIN instead of their SSN. That keeps the SSN off documents that circulate among clients, reducing exposure to identity theft.

Example of an EIN in Use

Hypothetical example for illustration only.

Dana works as a freelance graphic designer under her own name. She has no employees and files no employment or excise returns, so she is not required to have an EIN. She applies online anyway, receives her number immediately, and puts it on the W-9 forms clients request instead of her Social Security number.

Two years later, Dana and a colleague form a partnership. A partnership is required to have an EIN, and because the ownership structure has changed from a sole proprietorship to a partnership, the existing number cannot be reused. The partnership files its own Form SS-4 and receives a new EIN, which it uses to open a business bank account and, after hiring an assistant, to file employment tax returns.

Closing an EIN

The IRS cannot cancel an EIN. The number stays with the entity even if it never files a return, and that same entity can use it again later. What the IRS can do is deactivate the business account linked to the number, for example for a startup that never launched or a business that has closed. To request this, mail a letter to the IRS that includes:

• The entity’s legal name
• The business address
• The EIN
• A copy of the EIN assignment notice, if you have it
• The reason for closing the account

What to Do If You Lose Your EIN

Several records hold the number:

1. The IRS assignment notice you received when the EIN was issued.
2. Your bank or financial institution, if you opened an account using the EIN.
3. Previously filed tax returns, which show the EIN on the forms.
4. The IRS Business & Specialty Tax Line at 1-800-829-4933. Have identifying information ready, since the IRS will confirm who you are before releasing the number.

EIN vs. TIN, SSN and ITIN

A taxpayer identification number (TIN) is a general term for any identification number used on a tax form. An EIN is one type of TIN. The main types are:

• EIN: for businesses, trusts, estates and other entities
• SSN (Social Security number): for individuals, issued by the Social Security Administration
• ITIN (individual taxpayer identification number): for individuals who need a tax number but are not eligible for an SSN
• ATIN (adoption taxpayer identification number): for children in the process of a pending U.S. adoption
• PTIN (preparer taxpayer identification number): for paid tax return preparers

Which TIN applies depends on the taxpayer. For an employee filing a personal return, the TIN is usually the SSN. For corporations, partnerships, trusts and estates, it is typically the EIN. A sole proprietor may use either, depending on whether an EIN is required for their situation.

Limitations of an EIN

An EIN identifies a business for federal tax purposes. It does not do several things people sometimes assume:

• It does not create a legal entity. Forming an LLC or corporation is done under state law. The EIN is assigned to an entity that already exists or is being established.
• It is not a business license or state registration. State tax accounts, sales tax permits and local licenses are separate.
• It is not a sign of verification. Having an EIN does not mean a company has been vetted, is in good standing, or participates in programs such as E-Verify, the federal employment eligibility system.

The Bottom Line

Anyone starting a business, hiring staff, forming a partnership or corporation, or managing a trust or estate needs to know whether an EIN is required. Applying through Form SS-4 is free, and online applicants in the U.S. get a number right away, so paying a third party adds nothing. Sole proprietors without employees can often skip it but may still want one to keep their SSN off client forms.