What Is an EIN and Why Your Business Needs One
An Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue Service in the format XX-XXXXXXX. It is also referred to as a Federal Tax Identification Number, or FEIN. The IRS uses it to identify your business entity for federal tax purposes the same way it uses a Social Security number to identify an individual.
Despite the name, you do not need employees to need an EIN. The term "Employer Identification Number" causes significant confusion — many sole proprietors, single-member LLCs, and trusts require an EIN even with zero employees.
Getting an EIN is completely free when you apply directly through the IRS. You do not need to pay a third-party service, a registered agent, or a filing company. Any website charging you a fee for EIN application is acting as an optional intermediary, not a required one.
Who Is Required to Get an EIN
The IRS mandates an EIN for any business or organization that meets at least one of the following conditions. Review this list carefully before assuming you can skip the application.
You must obtain an EIN if your business or organization:
Has one or more employees on payroll, including part-time workers. This applies to sole proprietors, LLCs, and corporations alike. The moment you hire your first employee, an EIN becomes mandatory.
Operates as a corporation, regardless of size or revenue. A single-owner corporation with no employees still requires an EIN because of how corporations file federal returns.
Operates as a partnership. Partnerships cannot use a partner's Social Security number for entity-level filings. An EIN is required at formation.
Files employment tax returns, excise tax returns, or alcohol, tobacco, and firearms returns.
Withholds taxes on income paid to a non-resident alien.
Has a Keogh plan or other qualified retirement plan.
Is involved in certain trust, estate, or non-profit structures that require federal tax filings.
For single-member LLCs and sole proprietors, the answer depends on your situation. A single-member LLC with no employees and no excise tax obligations may legally use the owner's Social Security number for federal tax purposes. However, most banks, credit unions, and payroll providers will require an EIN to open a business account or process payroll, even when the IRS does not technically mandate one. Obtaining an EIN proactively is almost always the right move for any LLC.
An LLC that elects S corporation or C corporation taxation must obtain an EIN, regardless of whether it has employees.
What You Will Use Your EIN For
Once issued, your EIN becomes the primary identifier attached to your business across federal, state, and private institutions. Understanding its uses helps clarify why it matters beyond just filing taxes.
Federal tax filings. You use your EIN on all federal business tax returns, including Form 1120 for corporations, Form 1065 for partnerships, and employment tax returns such as Forms 941 and 940.
Payroll and employment taxes. Every payroll tax deposit, quarterly Form 941, and annual Form 940 requires your EIN. Your payroll provider will request it before processing a single paycheck.
Issuing 1099s. When you pay independent contractors $600 or more in a calendar year, you must issue Form 1099-NEC. Your EIN identifies your business as the payer on that form.
Opening a business bank account. Virtually every bank and credit union in the United States requires an EIN to open a business checking or savings account for an LLC, corporation, or partnership. Some banks will accept a sole proprietor's SSN, but an EIN is preferred and easier to manage long-term.
Applying for business credit. Business credit cards, lines of credit, and SBA loans tie creditworthiness to your EIN. Building a credit profile under your EIN, rather than your personal SSN, separates business and personal credit histories.
State registrations and licenses. Many states require your federal EIN as part of state tax registration, sales tax permits, and professional license applications.
Working with vendors and clients. Some larger companies and government contractors require your EIN before they will issue payment, particularly when they need to prepare 1099s at year-end.
What You Need to Gather Before Applying
The IRS online application will not allow you to save progress and return later. Once you start, you need to complete it in one session. Gathering everything in advance prevents the session from timing out mid-application.
Legal name of the entity. This must match exactly what is on file with your state. If your LLC is registered as "Green Valley Consulting LLC," do not enter "Green Valley Consulting" without the "LLC." Discrepancies between your state registration and your EIN records cause complications when filing.
Trade name or DBA. If you operate under a name different from your legal entity name, enter it here. This is optional but useful for your records.
Mailing address. This is where the IRS will send correspondence, including your CP 575 confirmation letter. Use a stable address you will have access to for years.
Physical location. The county and state where the business is physically located. For online businesses, this is typically your home county or your primary office location.
Entity type. You will select from sole proprietorship, partnership, LLC, corporation, S corporation, personal service corporation, estate, trust, non-profit, or other.
Date business started or was acquired. Use the actual formation date from your state filing for LLCs and corporations. For sole proprietorships, use the date you began business activity.
Fiscal year closing month. Most small businesses use December as their fiscal year-end, aligning with the calendar year. If your accountant has advised a different closing month, confirm it before applying.
Expected number of employees in the next 12 months. This is an estimate. If you are unsure, enter the most realistic number. You will not be penalized for an inaccurate estimate.
Principal business activity. A brief description of what your business does. Examples: retail clothing sales, residential construction, IT consulting, restaurant, real estate rental. Be specific enough to be accurate, but do not overthink this field.
Responsible party information. The responsible party is the individual who owns, controls, or manages the entity. For most small LLCs and corporations, this is the primary owner. You will need their full legal name and Social Security number or ITIN. The IRS requires a human individual as the responsible party in nearly all cases. Another entity cannot serve as the responsible party.
How to Apply for an EIN Online (Step-by-Step)
The online EIN application through the IRS EIN Assistant at IRS.gov is the fastest method available. A correctly completed application results in an EIN being issued immediately at the end of the session. The entire process takes roughly five to ten minutes.
Eligibility to use the online system. Your principal business must be located in the United States or a US territory. The responsible party must have a valid Social Security number or ITIN. The IRS limits applications to one EIN per responsible party per business day.
Step 1: Access the correct IRS page. Go directly to IRS.gov and search for "EIN online application" or navigate to the Small Business section. The official tool is called the EIN Assistant. Be cautious of third-party sites that appear in search results mimicking the IRS interface — the real application is free with no credit card required.
Step 2: Select your entity type. The IRS will present a list of entity types. Select the one that matches your legal structure. If you formed an LLC with your state, select LLC. Do not select "sole proprietor" if you formed an LLC. Your selection here determines which follow-up questions appear and how the EIN is classified.
Step 3: Answer LLC-specific questions (if applicable). For LLCs, the system will ask how many members the LLC has and which state it was organized in. Single-member LLCs and multi-member LLCs receive different default tax treatment, so answer accurately.
Step 4: Select your reason for applying. Common reasons include: started a new business, hired employees, opened a bank account, changed type of organization, or purchased a going concern. Select the reason that best describes your situation.
Step 5: Enter the entity's legal name and trade name. Type the legal name exactly as registered with your state. If your LLC is "Sunrise Property Group LLC," enter every word including "LLC."
Step 6: Enter the mailing address and physical location. The system will ask for a mailing address and then the county and state of the principal business location. If your mailing address is a PO box, you will also need to enter the physical street address separately.
Step 7: Enter responsible party information. Provide the responsible party's full legal name and SSN or ITIN. This person's identity will be linked to the EIN in IRS records. Ensure the name matches their Social Security card exactly.
Step 8: Enter business start date and fiscal year. Use your actual state formation date for formal entities. For fiscal year, most businesses select December unless advised otherwise by a CPA.
Step 9: Enter employee and activity information. Provide your employee count estimate for the next 12 months. Then describe your principal business activity in plain language.
Step 10: Review the summary page carefully. The IRS presents a summary of all entries before submission. Review every field. Correcting errors after EIN issuance requires contacting the IRS directly, which takes significantly more time than reviewing the form before submission.
Step 11: Submit and save your confirmation immediately. After submission, the IRS displays your EIN on screen. Below the EIN, there is a link to download your CP 575 confirmation notice in PDF format. Download and save this file immediately. Print a physical copy and store it with your formation documents. The IRS does not routinely reissue the CP 575 — if you lose it, you must request a replacement verification letter called Form 147C, which requires calling the IRS Business Line and waiting by mail.
How to Apply by Fax
Fax is the second-fastest method and is useful when the online system is unavailable or when you are not eligible for the online application.
Step 1: Download Form SS-4. Obtain the current version directly from IRS.gov. Do not use a Form SS-4 downloaded from a third-party source, as versions are occasionally updated.
Step 2: Complete every required field. Common errors that cause fax rejections include leaving the responsible party SSN blank, selecting the wrong entity type on Line 9a, and entering an inconsistent business name.
Step 3: Sign and date the form. An unsigned Form SS-4 will not be processed.
Step 4: Include a return fax number. Write your fax number clearly at the top of the form or in a cover note. The IRS uses this number to send back the EIN confirmation.
Step 5: Send to the correct IRS fax number. The fax number depends on your state of residence or business location. The correct numbers are listed in the Form SS-4 instructions, which are updated periodically. Do not use a fax number from a third-party site — verify it directly from the official IRS instructions.
Processing time. The IRS typically processes fax applications within four business days when the form is complete. The confirmation is faxed back to the return number you provided.
How to Apply by Mail
Mail is the slowest method and is generally used only when fax and online are not practical options. Processing time is four to five weeks from the date the IRS receives your form.
Step 1: Complete Form SS-4. Same accuracy requirements as the fax method apply here.
Step 2: Sign and date the form.
Step 3: Mail to the correct IRS address for your state. The mailing addresses are listed in the Form SS-4 instructions. There are different addresses for businesses inside the United States versus those with no US principal place of business.
Step 4: Wait for CP 575 by mail. The IRS mails the CP 575 confirmation letter to the address you provided on Line 4 of Form SS-4. Ensure this is a reliable address you will have access to for at least several weeks.
How to Apply If You Are Outside the United States
If your LLC or corporation has no legal residence or principal place of business in the United States, you cannot use the online EIN application system. International applicants must apply by telephone, fax, or mail.
For telephone applications, the IRS operates a dedicated international EIN telephone line. The caller must be authorized to receive the EIN on behalf of the entity. The IRS agent will ask you to complete Form SS-4 verbally during the call and will issue the EIN at the end of the call if everything is in order. Have a completed Form SS-4 in front of you before calling.
Fax and mail remain available as alternatives. Processing timelines for international fax and mail applications are the same as domestic.
How to Complete Form SS-4 Correctly
Form SS-4 is the official IRS application for an EIN. Even if you apply online, understanding what the form asks helps you prepare accurate answers. Each line has a specific purpose.
Line 1: Legal name of the entity. Enter the exact registered name. No abbreviations unless the abbreviation is the actual registered name.
Line 2: Trade name or DBA. Complete this only if your business operates under a name different from the legal entity name.
Line 3: Executor, administrator, trustee. Relevant for estates and trusts. Leave blank for LLCs and corporations.
Line 4a and 4b: Mailing address. Enter the primary mailing address where IRS correspondence should be sent. If this is a PO box, enter the box number on Line 4a and the city, state, and ZIP on Line 4b.
Line 5a and 5b: Street address if different from mailing address. Complete if the physical business location differs from the mailing address.
Line 6: County and state. Enter the county and state where the business is physically located.
Line 7a and 7b: Responsible party name and SSN or ITIN. The responsible party's full legal name and taxpayer identification number. This is one of the most important fields on the form. An error here can delay or void the application.
Line 8a and 8b: LLC confirmation. If the entity is an LLC, check "Yes" on Line 8a. Then enter the number of members on Line 8b and the state of organization on Line 8c.
Line 9a: Type of entity. Select the entity type from the list. For an LLC, you will also select the tax classification (sole proprietor, corporation, or partnership) based on your intended tax treatment.
Line 10: Reason for applying. Select the most accurate description.
Line 11: Date business started or acquired.
Line 12: Closing month of accounting year. Typically December for most small businesses.
Line 13: Highest number of employees expected in the next 12 months. Enter estimates for agricultural, household, and other employees in separate boxes.
Line 14: Does the applicant expect to have $1,000 or less in employment tax liability? Relevant for smaller operations that may qualify for annual rather than quarterly filings.
Line 15: First date wages were paid or will be paid.
Line 16: Principal activity. Describe what the business does. This description feeds into industry classification codes the IRS uses internally.
Line 17: Specific products or services. Provide a brief description of your main products or services.
Line 18: Third-party designee. If someone other than the responsible party (an accountant or attorney) completed the form, their information goes here.
Signature line. Must be signed by the responsible party or an authorized representative. An unsigned form will not be processed.
What Happens After Your EIN Is Issued
Receiving your CP 575. The CP 575 is the official IRS confirmation of your EIN. It includes your EIN, your entity name, and the date the EIN was issued. Banks, accountants, and state agencies will request a copy when you open accounts or register for state taxes. Treat this document like a birth certificate for your business.
Storing your EIN securely. Save your CP 575 as a PDF in at least two locations, such as cloud storage and a local drive. Add your EIN to your business formation folder alongside your Articles of Organization, operating agreement, and state tax registration.
What to do if you lose your CP 575. Call the IRS Business Line and request Form 147C, which is an EIN verification letter. You must be the responsible party or have authorization. The IRS will mail the 147C to the address on file. There is no option to receive it via email or fax if you are a domestic entity.
Updating IRS records after changes. If your business name changes, your address changes, or your responsible party changes, notify the IRS in writing. Address changes can be reported using Form 8822-B. Responsible party changes require a written notification sent to the IRS. These updates keep your EIN records current and prevent compliance issues.
When Your Business Needs a New EIN
An EIN is generally permanent and stays with the entity throughout its existence. However, certain structural changes require a brand new EIN rather than updating the existing one.
You typically need a new EIN when:
A sole proprietorship incorporates. The corporation is a new legal entity and cannot reuse the sole proprietor's EIN.
A sole proprietorship takes on a partner and becomes a partnership.
A partnership dissolves and the partners form a new partnership.
A corporation declares bankruptcy and reorganizes as a new entity.
You purchase a business and are operating it as a different legal entity from the prior owner.
You typically do not need a new EIN when:
Your business changes its name. File a name change update with the IRS rather than applying for a new EIN.
You change your business address.
Your LLC elects S corporation status. The EIN remains the same; only the tax classification changes.
You add new members to an existing LLC.
A corporation changes from C corporation to S corporation status.
If you are unsure whether your situation requires a new EIN, consult the IRS publication "Do You Need a New EIN?" at IRS.gov or speak with a CPA or tax attorney before applying for a second EIN unnecessarily.
Common Mistakes to Avoid
Applying before your entity is legally formed. The name on your EIN application must match your state registration. If you apply for an EIN before your Articles of Organization or Articles of Incorporation are processed and approved by the state, you may end up with a mismatch. Wait until you have a confirmed state filing before applying.
Using a third-party paid service. Many websites rank highly in search results for "apply for EIN" and charge $50 to $300 to submit the same free IRS application on your behalf. There is nothing wrong with using them if you prefer, but there is also no benefit. The IRS does not recognize or prioritize applications submitted by third parties over those submitted directly.
Entering the wrong entity type. Selecting "sole proprietor" when you formed an LLC, or selecting "LLC" when you never filed with the state, creates an inconsistency in IRS records that requires written correction later.
Failing to save the CP 575 immediately. The online application shows your EIN and allows a one-time PDF download at the end of the session. Many applicants close the browser before downloading the confirmation. If this happens, you must request Form 147C by phone. This process adds days or weeks to your timeline if you are under a bank account deadline.
Listing the wrong responsible party. The responsible party must be an individual with a valid SSN or ITIN. Entering an LLC or corporation as the responsible party is not permitted in most cases and will cause the application to be rejected or flagged for review.
Confusing your EIN with state tax IDs. Your EIN is a federal identifier only. Most states issue their own tax registration numbers for sales tax, employer withholding, and other state-level obligations. Your federal EIN and your state tax ID are separate numbers with separate registration processes.
Sources and References
Internal Revenue Service, Employer ID Numbers: https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers
IRS Form SS-4 and Instructions: https://www.irs.gov/forms-pubs/about-form-ss-4
Cornell Law School, Legal Information Institute, EIN: https://www.law.cornell.edu/wex/employer_identification_number
IRS guidance on when a new EIN is required: https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein