What is an EIN Number? Your Guide to Employer Identification Numbers

An EIN, or Employer Identification Number, is essentially a Social Security number for your business. It’s a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States. Think of it as your business’s federal tax ID, crucial for various operational and compliance purposes. Getting an EIN is a free and straightforward process directly through the IRS, often completed within minutes online.

Who Needs an EIN: Determining Your Business Requirements

Knowing whether your business requires an EIN is a fundamental first step. Generally, you will need an EIN if your business structure falls into any of the following categories:

Employing Staff: If you hire employees, an EIN is mandatory. It’s necessary for reporting payroll taxes, Social Security, and Medicare for your employees.
Operating as a Corporation or Partnership: Most corporations (both C-corps and S-corps) and partnerships are required to obtain an EIN, regardless of whether they have employees. This is due to their business structure and tax obligations.
Operating as a Limited Liability Company (LLC) under Certain Conditions: While single-member LLCs without employees can often use the owner’s Social Security number, LLCs with more than one member (multi-member LLCs) or those electing to be taxed as a corporation are generally required to have an EIN. Even single-member LLCs might choose to get an EIN for liability protection and to keep their personal and business finances separate.
Paying Excise Taxes: If your business is liable for excise taxes (taxes on specific goods or activities, like fuel or tobacco), you’ll need an EIN to remit these payments.
Operating a Tax-Exempt Organization: Non-profit organizations, charities, and other tax-exempt entities must have an EIN to gain and maintain their tax-exempt status.
Administering Trusts or Estates: If you operate certain trusts, estates, or Real Estate Mortgage Investment Conduits, an EIN is often required for tax and operational purposes.
Withholding Taxes for Non-Resident Aliens: If your business pays income (other than wages) to non-resident aliens and is required to withhold taxes, you will need an EIN.

Even if your business doesn’t strictly need an EIN for federal tax obligations, obtaining one can be beneficial. Many businesses opt for an EIN to open business bank accounts, apply for state and local licenses, or establish business credit. It’s important to note that EINs are specifically for business-related activities and not intended for purposes like state tax lien auctions or lottery participation.

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Prerequisites Before Applying for Your EIN

Before you begin the EIN application process, ensure you have the following in order:

Establish Your Business Entity First: If you are setting up a formal legal entity such as an LLC, partnership, or corporation, it is crucial to officially form this entity with your state before applying for an EIN. This registration process establishes your business legally and provides the necessary details you’ll need for your EIN application. This requirement also applies to tax-exempt organizations.

Tax-Exempt Organizations: Formation is Key: For non-profits aiming for tax-exempt status, do not apply for an EIN until your organization is legally formed according to state regulations. It’s vital to be aware that most tax-exempt organizations face automatic revocation of their tax-exempt status if they fail to file required returns or notices for three consecutive years. Political organizations have an even tighter timeframe, needing to file Form 8871 within 24 hours of formation. An EIN is necessary to file this form.

Methods to Apply for an EIN: Choosing the Right Approach

The IRS provides several convenient methods for businesses located within the United States to apply for an EIN:

Online Application: The Fastest Route: The IRS’s online EIN application is the quickest and most efficient method. You can access the application directly on the IRS website and complete it in minutes. Upon successful submission, you will receive your EIN immediately. This method is ideal for businesses needing an EIN urgently.
Fax Application: If you prefer a paper-based method, you can complete Form SS-4, “Application for Employer Identification Number,” and fax it to the IRS at 855-641-6935. Using the fax method, you can expect to receive your EIN within approximately four business days.
Mail Application: For non-urgent applications, you can mail Form SS-4 to the Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Processing times for mail applications are longer, generally taking around four weeks to receive your EIN.

Applying for an EIN from Outside the U.S.

For businesses whose principal place of business is located outside of the United States, the application process varies slightly:

Phone Application: International applicants can apply by phone by calling the IRS at 267-941-1099, Monday through Friday, from 6:00 a.m. to 11:00 p.m. Eastern Time.
Fax or Mail Application (International): You can also submit Form SS-4 via fax to 855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.). Alternatively, mail the form to Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999.

Important Application Limit: Regardless of the application method used (online, phone, fax, or mail), you are limited to applying for only one EIN per business day.

Understanding the Responsible Party in EIN Applications

Every EIN application requires the designation of a “responsible party.” This individual is the person who has ultimate control over the entity and its assets. The responsible party is not necessarily an owner or officer, but rather the person who holds significant authority within the business. For individuals, this is often the business owner. For entities, it might be a principal officer, general partner, or trustee.

The EIN application requires the following information for the responsible party:

Full Legal Name
Taxpayer Identification Number (TIN): This can be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or, if the responsible party is another entity, its Employer Identification Number (EIN).
Signature: The responsible party must sign the application, attesting to the accuracy of the information provided.

Caution Against Nominees: It is critical to understand that nominees are not authorized to apply for an EIN on behalf of a business. Using a nominee to apply for an EIN can expose the entity’s confidential information and privacy to unnecessary risks. The responsible party should always be a direct stakeholder with genuine authority over the entity.

Utilizing Your EIN: When and Where to Use It

Once you receive your EIN, you can begin using it almost immediately for many business operations. Common uses for your EIN include:

Opening Business Bank Accounts: Banks require an EIN to open accounts for partnerships, corporations, LLCs (in many cases), and other business entities.
Applying for Business Licenses and Permits: Many federal, state, and local agencies require an EIN when applying for various business licenses and permits necessary to operate legally.
Filing Tax Returns: Your EIN is essential for filing federal tax returns for your business.
Establishing Business Credit: To build business credit separate from your personal credit, you will need an EIN.
Hiring Employees: As mentioned earlier, an EIN is mandatory for businesses that hire employees to manage payroll and employment taxes.

Waiting Period for Certain IRS Systems: While your EIN is generally usable immediately, allow up to two weeks before attempting to use it for the following IRS systems:

TIN Matching Program: This IRS system verifies taxpayer identification numbers. Allow processing time for your EIN to become fully active in this system.
E-filing Tax Returns: If you plan to e-file your business tax returns, wait approximately two weeks after receiving your EIN.
Electronic Federal Tax Payment System (EFTPS): To make federal tax deposits and payments electronically through EFTPS, it’s advisable to wait for about two weeks after EIN issuance. Refer to IRS Publication 15 (Circular E, Employer’s Tax Guide) and Publication 4275 (EFTPS Express Enrollment for New Businesses) for detailed guidance.

Handling Situations When You’re Waiting for Your EIN

Tax Return Due Dates: If a tax return deadline approaches and you have applied for an EIN but haven’t received it yet, do not delay filing. In the space on the tax form designated for the EIN, write “Applied For” and the date you submitted your EIN application.

Tax Deposits Due: Similarly, if a tax deposit due date arrives before you receive your EIN, send your payment to the appropriate IRS service center address for your state. Make the check or money order payable to the Internal Revenue Service, and clearly include your business name (as it appears on Form SS-4), business address, the type of tax being paid, the tax period covered, and the date you applied for your EIN.

When is a New EIN Required? Understanding Business Changes

Generally, you will need to apply for a new EIN if there are significant changes to your business’s ownership or structure. Situations that typically necessitate a new EIN include:

Change in Business Structure: For example, if a sole proprietorship incorporates and becomes a corporation, a new EIN will be required for the newly formed corporation. Similarly, changing from a partnership to an LLC might also necessitate a new EIN, depending on specific circumstances and state regulations.
Change in Ownership: If the ownership of a partnership terminates and a new partnership is formed, a new EIN will be necessary.

Situations Where a New EIN is NOT Required: It’s important to note that certain changes do not require you to obtain a new EIN. These include:

Changing Your Business Name: A simple name change does not require a new EIN.
Changing Your Business Address: Moving your business location does not necessitate a new EIN.
Changing the Responsible Party: If the responsible party for your business changes, you do not need to apply for a new EIN.

For detailed information on specific scenarios requiring a new EIN, consult IRS guidelines on “when to get a new EIN.”

What to Do When You No Longer Need Your EIN

If your business closes or ceases operations and you no longer require your EIN, the IRS does not technically “cancel” EINs. However, the IRS can “deactivate” your EIN, effectively closing the business’s tax account with the federal government. To deactivate your EIN, you typically need to send a letter to the IRS indicating that you wish to close your business account.

Recovering a Lost or Forgotten EIN

If you have misplaced or forgotten your EIN, there are several ways to retrieve it:

Review Your EIN Application Notice: Check the notice issued by the IRS when your EIN application was approved. The EIN should be clearly stated on this document.
Contact Your Bank: Your business bank may have your EIN on file, especially if you opened a business account using it.
Check State and Local Licensing Agencies: Agencies where you have applied for state or local business licenses may have your EIN records.
Review Past Tax Returns: Your EIN should be listed on previously filed business tax returns.

If these methods are unsuccessful, you can call the IRS Business and Specialty Tax Line at 800-829-4933, Monday through Friday, 7:00 a.m. to 7:00 p.m. ET. After verifying your identity and authorization, the IRS representative can provide your EIN over the phone.

Managing Multiple EINs or Business Entities

A business entity should generally have only one EIN. If you believe you may have inadvertently obtained multiple EINs or are unsure which EIN to use, contact the IRS Business and Specialty Tax Line at 800-829-4933 (TTY 800-829-4059). The IRS can help you determine the correct EIN to use.

If you acquire an existing business, it is crucial to use your own EIN for reporting and depositing employment taxes related to the acquired business. Do not use the previous owner’s EIN. Refer to IRS Publication 15 (Circular E, Employer’s Tax Guide) for further details.

Handling Unrequested EINs and Potential Fraud

If you receive an EIN confirmation notice for a business you did not apply for, or suspect someone may have fraudulently obtained an EIN using your information, take immediate action. Report the incident to the IRS and review guidance on “If you received an EIN you didn’t request” and information on reporting tax scams or fraud.

Resolving Issues with Deactivated Retirement Trust EINs

If you encounter issues with a deactivated EIN for a retirement trust, you can reactivate it. Send the following information to the IRS via fax (855-214-7520) or mail (Internal Revenue Service, Attn. EP Entity, M/S 6273, Ogden, UT 84201) or delivery (Internal Revenue Service, 1973 N Rulon White Blvd., Attn. EP Entity, M/S 6273, Ogden, UT 84404):

The EIN in question
The trust name
The sponsor’s or trustee’s address and contact information

Beneficial Ownership Information Reporting to FinCEN

It’s important to be aware of new beneficial ownership information reporting requirements from the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Starting January 1, 2024, certain corporations, LLCs, and similar entities created or registered to do business in the United States are required to report information about their beneficial owners (individuals who ultimately own or control the company) to FinCEN.

The initial reporting deadline is based on when your company receives official notice of its creation or registration, or when public notice is first provided, whichever is earlier.

For detailed information on whether your company is required to report, who qualifies as a beneficial owner, and reporting deadlines, please visit FinCEN’s website. For questions related to FinCEN’s beneficial ownership information reporting requirements, contact FinCEN directly, as the IRS cannot provide assistance with FinCEN-related inquiries.

For further assistance or questions regarding EINs, please refer to the official IRS website or contact the IRS directly. The IRS provides comprehensive resources to help businesses understand and manage their federal tax obligations.