What Is an EIN
An Employer Identification Number, commonly called an EIN, is a nine digit number issued by the Internal Revenue Service. It is also known as a Federal Tax Identification Number.
The IRS uses an EIN to identify a business entity for federal tax reporting purposes. It functions similarly to a Social Security number, but for businesses and certain organizations.
An EIN is issued by the IRS at no cost through Form SS 4 or the IRS online application system.
Who Needs an EIN
Not every business must obtain an EIN, but many are legally required to do so.
According to IRS guidelines, you must obtain an EIN if your business:
- Has employees
- Operates as a corporation
- Operates as a partnership
- Files employment tax returns
- Files excise tax returns
- Withholds taxes on income paid to nonresident aliens
- Has a Keogh retirement plan
Single member LLCs and sole proprietors may also need an EIN depending on structure and activity.
For example:
- A single member LLC with no employees may use the owner’s Social Security number for federal tax purposes
- A single member LLC with employees must obtain an EIN
- An LLC electing S corporation taxation must obtain an EIN
Primary Uses of an EIN
An EIN serves several important functions in business operations.
It is used for:
- Filing federal income tax returns
- Filing payroll tax returns
- Reporting employment taxes
- Issuing Forms 1099
- Opening a business bank account
- Applying for business licenses
- Establishing business credit
Financial institutions generally require an EIN to open a business account for an LLC or corporation.
EIN and Different Business Structures
The requirement for an EIN depends partly on how the entity is structured.
Sole proprietorships:
- May use the owner’s Social Security number
- Must obtain an EIN if hiring employees
Partnerships:
- Must obtain an EIN
- Cannot use a partner’s Social Security number
Corporations:
- Must obtain an EIN
- Use the EIN for all federal filings
Limited liability companies:
- Single member LLCs may not need one unless required by activity
- Multi member LLCs must obtain an EIN
- LLCs electing corporate taxation must obtain an EIN
The IRS treats entity classification and EIN issuance as separate matters.
How to Apply for an EIN
The Internal Revenue Service issues EINs directly. The official application form is Form SS 4. There is no filing fee.
You can apply using one of four methods:
- Online
- Fax
- Telephone for international applicants
Each method has specific eligibility rules and processing timelines.\
Information You Must Gather Before Applying
Before starting the application, collect the required information. The IRS will not process incomplete submissions.
You will need:
- Legal name of the entity exactly as filed with the state
- Trade name or DBA if applicable
- Mailing address
- County and state where the business is located
- Type of entity such as LLC, corporation, or partnership
- Date the business was started or acquired
- Closing month of the accounting year
- Number of employees expected in the next 12 months
- Principal business activity description
- Responsible party full legal name
- Responsible party Social Security number or ITIN
The responsible party must be an individual, not another entity, in most cases.
Step by Step Online EIN Application
The fastest method is the IRS online EIN Assistant available at IRS.gov.
Online eligibility requirements:
- The principal business must be located in the United States or US territories
- The responsible party must have a valid SSN or ITIN
- Only one EIN can be issued per responsible party per day
The process works as follows:
- Select the type of entity
- Confirm eligibility questions
- Enter entity legal name and trade name
- Enter mailing and physical address
- Provide county and state information
- Identify responsible party
- Select reason for applying
- Enter start date of the business
- Provide employee information
- Describe principal activity
- Review entries carefully
- Submit application
If approved, the EIN is issued immediately. You can download the confirmation notice, known as CP 575, in PDF format.
It is important to save this confirmation because the IRS does not routinely reissue it.
Filing by Fax
You may fax Form SS 4 to the appropriate IRS number based on your state.
Fax filing steps:
- Complete Form SS 4 accurately
- Sign the form
- Include a return fax number
- Send to the IRS fax number listed in Form SS 4 instructions
Processing time is typically about four business days if the form is completed correctly.
The IRS will fax back a confirmation letter containing the EIN.
Filing by Mail
Mail filing is the slowest method.
Mail filing steps:
- Complete Form SS 4
- Sign and date the form
- Mail to the IRS address listed for your state
Processing may take four to five weeks.
The IRS will mail a CP 575 confirmation letter to the address provided.
Applying from Outside the United States
International applicants who do not have a legal residence or principal place of business in the United States cannot use the online system.
They must apply by:
- Telephone
- Fax
The IRS provides a dedicated international EIN phone line. The caller must be authorized to receive the EIN.
How to Complete Form SS 4 Correctly
Accuracy on Form SS 4 is critical. Common errors cause delays.
Important sections include:
Line 1 requires the exact legal entity name
Line 2 requires trade name if different
Line 7 requires the responsible party’s legal name
Line 9a requires entity classification selection
Line 10 requires reason for applying
Line 11 requires the date business started
Line 13 requires number of employees expected
Line 16 requires principal business activity
If the entity is an LLC, Line 8a and 8b require:
- Confirmation that the entity is an LLC
- Number of members
- State of organization
Ensure the entity classification matches your intended tax status.
EIN Confirmation and Recordkeeping
After issuance, retain:
- CP 575 confirmation letter
- Copy of Form SS 4
- Any IRS correspondence
Banks, payroll providers, and state agencies often request a copy of the EIN confirmation.
If the confirmation is lost, you may request an EIN verification letter called Form 147C by contacting the IRS Business Line.
Responsible Party Requirement
The IRS requires designation of a responsible party.
The responsible party is:
- The individual who controls or manages the entity
- A person who owns or controls at least 25 percent of the entity
- An individual rather than another entity in most cases
This rule is intended to improve transparency and reduce misuse.
The responsible party must have a valid taxpayer identification number.
EIN and Privacy
An EIN does not replace federal reporting obligations.
Under federal law:
- Businesses must report income associated with the EIN
- The EIN is linked to the responsible party
- Financial institutions verify identity under federal banking laws
An EIN does not provide anonymity from tax authorities.
It does help separate personal and business financial activity.
When You Need a New EIN
An EIN generally remains with the entity for its lifetime. However, certain changes require a new EIN.
Situations that typically require a new EIN include:
- Formation of a new corporation
- Conversion from sole proprietorship to partnership
- Creation of a new partnership
- Bankruptcy of a corporation
Situations that usually do not require a new EIN include:
- Change in business name
- Change in location
- Election of S corporation status
- Adding new members to an existing LLC
The IRS publishes specific guidance on when a new EIN is required.
Common Misunderstandings
Several misconceptions frequently arise regarding EINs.
Common misunderstandings include:
- An EIN is not a business license
- An EIN is not the same as state tax registration
- An EIN does not automatically create tax liability
- An EIN is free to obtain from the IRS
- Third party services that charge fees are optional intermediaries
Always apply directly through the IRS to avoid unnecessary costs.
Practical Recommendations
Before applying for an EIN, consider the following:
- Confirm your legal entity formation is complete
- Determine whether you will hire employees
- Decide on your tax classification election
- Ensure responsible party information is accurate
- Use the IRS official website to apply
Accurate information at the time of application prevents processing delays.