For business owners, securing an Employer Identification Number (EIN) is a vital step in setting up and running a compliant operation. An EIN—also called a Federal Tax ID Number—is a nine-digit code issued by the IRS that uniquely identifies your business for tax purposes.
This detailed guide will walk you through the EIN application process, how to know if your business needs one, how to apply, what to expect in terms of timing, and what to do if your EIN is lost.
Do You Need an EIN?
Most businesses are required to have an EIN. If your company hires employees, is structured as a partnership or corporation, or maintains a retirement plan, you’ll need one. You’re also required to get an EIN if you withhold taxes on income—aside from wages—paid to a non-resident alien. And don’t expect to open a business bank account without it!
How to Apply for an EIN
There are several ways to request an EIN:
- Online (the fastest and easiest)
- By mail
- By fax
- By phone (available in certain cases)
The online application offered by the IRS is free and provides your EIN right after submission. You’ll need a valid Taxpayer Identification Number (TIN), such as a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). You’ll also need to answer questions about your business—like the entity type, number of employees, and business activities—as well as provide the name and TIN of the individual who oversees the organization and its finances.
Note: If the responsible party doesn’t have an SSN or ITIN, the online method won’t work, and you’ll need to apply by mail or fax, which will take longer.
Final Thoughts
Getting an EIN is crucial to legally operate your business, handle tax responsibilities, and open a business bank account. The application process is generally quick and straightforward, especially online. Since most businesses are required to have an EIN, it’s a good idea to apply shortly after forming your company.