What is an Employer Identification Number (EIN)?
Almost all types of businesses need an Employer Identification Number (EIN). An EIN (which is also known as a Federal Employer Identification Number or FEIN) is issued by the IRS and is used to identify a business in much the same way as a Social Security Number (SSN) is used to identify an individual. Your EIN is required on your business tax returns, business tax account, and tax-related documents. It is also required by many banks, financial institutions, credit card companies, and vendors.
Note: A federal employment identification number (FEIN) is the same thing as an employer identification number (EIN). The only exception to this rule is when someone uses the abbreviation EIN to refer to a state tax identification number.
Some states require a separate state tax ID number; other states use the Federal Tax ID number.
Tip: Both your individual SSN and your business EIN are nine digits. But SSNs take the form 123-45-6789. In contrast, EIN numbers take the form 12-3456789.
What other terms are used when referring to the federal tax ID number?
Although “Employer Identification Number” or “EIN” is the term used most commonly, and is the term used by the IRS, you may also see other terms used when referring to the number issued by the IRS to identify employers and business entities, including the following:- Tax ID number
- Business Tax ID
- Business Taxpayer identifying number
- Business Taxpayer ID number
- Business Tax ID number
- Federal Business Tax ID
What kinds of businesses need an EIN?
Nearly every form of business organization—including sole proprietorships, partnerships, corporations, LLCs, nonprofits, estates, and trusts - needs an EIN if it has employees, and some, such as corporations, trusts, and partnerships need an EIN whether or not they have employees.
Corporations: If your business is a corporation, it will need an EIN. It doesn’t matter if it’s taxed as a C Corporation or an S Corporation. It also doesn’t matter if it has employees.
Multi-member LLCs: If your LLC has two or more owners, it must have an EIN. This is true whether it accepts the default classification of being taxed as a partnership or it elects to be taxed as a corporation (including an S corporation). It also needs an EIN even if it doesn’t have employees.
Single-member LLCs: If an LLC has only one owner, and it is disregarded as an entity for federal tax purposes (e.g., taxed like a sole proprietorship), and it has no employees, it can use its individual owner’s tax ID (e.g., SSN). If it has employees, or elects to be taxed as a corporation (C corporation or S corporation), it will need an EIN.
Sole proprietors: If you run your business as a sole proprietor and you don’t have any employees, the IRS generally allows you to use your individual tax ID (e.g., SSN) as your FEIN.
The IRS requires you to have an EIN, even though you’re a sole proprietor (or a single member LLC taxed like a sole proprietor), if:
- You have a Keogh pension plan
- You have any employees
- You have to file excise tax returns (e.g. alcohol, tobacco, firearms)
Can I get an EIN even if my business does not need one?
Yes. In fact, there are several reasons why you might want an EIN even if it is not required by the IRS, including the following:
- Banks, credit card companies, and vendors will likely demand your EIN before transactions.
- You may need it for state tax purposes or for applying for state or local business licenses
- It helps avoid embarrassment or delay a payment if a business lead or a customer wants an EIN (instead of SSN) to seal a deal or pay your invoice
- Using an EIN instead of your SSN adds credibility
- Using an EIN helps protect the privacy of your SSN
What information is required for an EIN?
When applying for your business EIN, you’ll need to provide certain information including the following:
- The legal name of the individual or entity for which the EIN is being requested, its address, county and state where the principal business is located, and trade name (your “doing business as” DBA name, if you have one)
- Responsible party’s name and tax ID (generally a person with authority to control, direct, or manage your business and disposition of its assets and funds)
- Type of entity (e.g., corporation, sole proprietor) and date your business was started or acquired
- Reason for applying (e.g., starting a new business, hiring employees, acquiring an ongoing business, changing type of entity)
- The highest number of employees you expect in the next 12 months, whether you’ll pay employment taxes annually (if you qualify) or quarterly, and first date wages were paid
- If your business is an LLC, the number of members
- Principal line of merchandise sold, construction work done, products produced, or services provided
You’ll also need to choose, from the list below, which best describes your principal business activity:
- Accommodation & food service
- Construction
- Manufacturing
- Finance & Insurance
- Health care & social assistance
- Retail
- Real estate
- Rental & leasing
- Transportation & warehousing
- Wholesale-agent/broker or Wholesale-other
- Other
How do I obtain an EIN?
If your business is based in the United States, you can request an EIN in one of three ways: online, by fax, or by mail. An online application is the speediest: you get your EIN immediately. Fax takes several days and mail takes five to six weeks. Foreign businesses can apply via fax, mail or by phone (not a toll-free call). Get the details in our article How to Get an EIN (Employer Identification Number).
How can I find my EIN if I’ve forgotten it?
Your business EIN is the equivalent of an individual's social security number. In the same way that you guard your social security number, you should take care to safeguard your EIN to reduce your risk of business identity theft. In fact, in its effort to reduce the risk of a taxpayer's identifying number getting stolen, there is no automated look-up for EINs. However, the IRS has provided guidance on how to find your number if you've forgotten it. The IRS's suggests that take these steps:
- Find the confirmation that the IRS sent when you applied for your EIN
- Contact your bank, state agency, or local agency if you supplied your number to open a bank account or obtain a business license
- Locate a previously filed tax return, which should have your EIN on it.
If these measures are not successful, you will need to contact the IRS directly to ask the IRS to search for your EIN number. You will need to provide identifying information. In addition, you must be a person that is authorized to receive the number on behalf of the business. For example, you must be a corporate officer of a corporation or a manager (or authorized member) of an LLC. If you provide the requisite identification and proper proof of authorization, the IRS employee will give you your EIN number over the phone.