EIN is an acronym for Employer Identification Number, which is an ID number issued to a business entities, non-profits and other entities by the IRS. EIN numbers are commonly referred to by a few other names such as a Tax ID, Federal Tax ID, Federal EIN or FEIN to name a few. One way to think about an EIN is that it is like a social security number for a business. EIN numbers come in a nine digit format and appear like 12-3456789.
Now that you know what an EIN is, your next question is likely “Do I need an EIN for my business?”. The Internal Revenue Service has a specific set of rules and characteristics that if they match your business you will need to apply for an EIN.
If your business answers “Yes” to any of these questions, you’ll be required to get an EIN:
- Do you have employees?
- Do you operate your business as a Corporation, Partnership or Multi-Member LLC?
- Do you file Employment, Excise or Alcohol, Tobacco and Firearms tax returns?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
Even if you answer no to all of the above questions you will still likely want to obtain an EIN. EIN numbers are used for and are required for a wide variety of different business processes, including opening a business bank account. For more information on this check out our guide on How to Open a Business Bank Account.
The process for applying for an EIN can be done for free and online directly with the IRS using the EIN Assistant.
Important Note: If you plan to form you business as an LLC or Corporation, make sure you complete the legal formation process before applying for an EIN.
Before applying its important to note that the IRS’ EIN Assistant unique qualities:
- The EIN Assistant has hours of operation and is only available Monday – Friday from 7 AM – 10 PM ET
- You can only apply if you have a principal business address that is in the U.S. or a U.S. Territory
- Before applying determine who will be designated as the Responsible Party
- All individuals designated as the Responsible Party must have a valid SSN or ITIN
- Responsible Party’s are limited to one EIN issued per day
- Your EIN application must be completed in one session and it cannot be saved
- Application Sessions will time-out after 15 minutes of inactivity, so be sure to have all information available before hand
- Once all validations are completed, your EIN will be issued immediately. Be ready to download, save and/or print your EIN confirmation
If you are apprehensive to submitting this information online you can also apply via Fax or Mail. Please note that if you apply via a method other than the online assistant the approval time before your EIN is issued will be days or even weeks. As a result the IRS urges all applicants to use the online assistant method to apply.
Information to Prepare before Applying Online
Given the above mentioned limitations of the EIN Assistant we recommend preparing the information you would need beforehand to ensure the application does not time-out. Prior to starting your application complete the following steps and have this information on hand:
- Determine the business structure you will operate under. If you need help be sure to check out our guide on How to Choose a Business Structure
- If you will operate as an LLC or Corporation, complete the legal formation of your business first
- Determine the legal name of your business (this must match the legal name as registered if a Partnership, LLC or Corporation)
- Designate the individual who will be the Responsible Party and be sure to have their full legal name and SSN or ITIN on hand
- Physical address of your Business (Must be a physical address, cannot be a PO Box)
- Starting Month and Year of your business
- Determine your Accounting Year (you will need to provide the closing month of your accounting year)
- If you will hire employees and if so how many
Apply via Fax
If applying by fax you can generally receive your EIN within 4 business days. To apply complete form SS-4 and fax the document to (855) 641-6935
Apply via Mail
To apply by mail print and complete form SS-4. Be sure to sign and date the application and mail to the address listed below and your EIN, if approved, will arrive in the mail after approximately 4 weeks:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Once your EIN has been issued you will be presented with an option to download your EIN confirmation letter, also known as form CP 575. Be sure to download this PDF and store it in a safe location. Your EIN confirmation letter is required for many vital tasks, the most important of which is opening a business bank account. If misplace your confirmation letter you can request a copy known as EIN Verification Letter 174-C. Learn more by visiting our guide, What is an EIN Confirmation Letter and How to Get a Copy?
What is a Responsible Party?
The “responsible party” for an EIN is the individual that has primary financial control of the entities activities.
Is an EIN required if you are self-employed or a Sole Proprietor?
You are not required to obtain an EIN if you are self employed or a Sole Proprietor unless you have employees or must pay excise taxes. While it is not required, it can be beneficial to obtain an EIN as they can help protect against identity theft.
Is there a difference between an EIN and Tax ID?
No, these terms refer to the same ID issued by the IRS, known as an Employer Identification Number.
How can you recover an EIN if it is lost or forgotten?
To recover a previously issued EIN you are required to call the IRS at 800-829-4933 between 7 AM and 10 PM Monday- Friday Eastern Time and be an authorized representative of the company trying to recover the EIN.
Can I get an EIN for a DBA?
No, an EIN is not issued to a DBA or trade name. DBA/Trade names are not legally recognized by the federal government and are not issued EIN.
Do you need an EIN for an LLC?
It depends on the specifics of your LLC if an EIN will be required. If your LLC has 2 or more members you will be required to obtain an EIN. If you will have employees or must pay excise taxes you will also be required to get an EIN. If you are a single member LLC you may not be required to have an EIN however it will be required if you want to open a business bank account.
Do I need a new EIN for each business?
This depends on the legal structure of each business. If you operate businesses as a Sole Proprietor and you have previously been issued an EIN, all of your businesses would use the same EIN. If each business is legally formed as an LLC or Corporation then a different EIN would be required for each business.
What is Reference Error 101
If you apply for an EIN and the IRS system returns reference error 101 this means that a business with a matching name in your state has previously been issued an EIN. This can occur if a business previously existed with the same that has been dissolved or closed. Since the IRS system uses a naming control it will reject applications from businesses that have names that have been previously used in your state. This will require that you call the IRS’ EIN support phone line at 800-829-4933 between 7 AM and 10 PM Monday- Friday ET.
Why did I receive Reference Error 101 as a Sole Proprietor?
If you apply as a Sole Proprietor and get reference error 101 it means that you have already been issued an EIN in the past. As a Sole Proprietor there is no legal separation between yourself as an individual and your business, thus you can only be issued 1 EIN as a Sole Proprietor.