You can apply for an employer identification number (EIN) for your small business directly with the IRS.

An EIN is a nine-digit number that identifies your business for tax and credit purposes, along with other reasons. It’s similar to a Social Security number for individuals but is instead for businesses.

While getting an EIN is optional for some small business owners, it’s important to have one if you want to build your business credit history. However, many small businesses are required to have an EIN, especially if they have employees.

Here’s what you need to know about getting an EIN and why it’s important.

How to Get an EIN

The process of getting an EIN is relatively simple, but it’s still a good idea to know the steps before you begin the process. 

If you’re just launching your business or you need an EIN to file your taxes, apply for a business loan, or you need it for another purpose, here are three easy steps to follow.

Check If You Are Eligible

There are only two main requirements to qualify for an EIN: your principal business must be located in the U.S. or a U.S. territory and the person applying must have a valid taxpayer identification number. 

Eligible taxpayer identification numbers include a Social Security number, an individual taxpayer identification number, and another employer identification number.

Your principal business is determined based on your primary revenue-generating activity and primary physical location. So even if you perform business outside of the U.S., you can still get an EIN if your main business activity is within the U.S. or one of its territories.

You don’t necessarily need to be the business owner to apply for an EIN for a business. Any responsible party who has a level of control over the company’s finances can submit the application.

Collect the Required Information

You don’t need to submit any documentation along with your application for an EIN, but you’ll likely need to gather some documents to get the information you need to fill it out. Among other things, important information to know includes:

• Basic information, such as the name of the business and its address.
  
• The type of business entity.
  
• Reason for applying.
  
• The date you started or acquired the business.
  
• The closing month of your accounting year (typically December).

• The highest number of employees you expect to have on your payroll in the next 12 months.
  
• The first date wages were paid or are expected to be paid.
  
• Whether you want to file an annual employer tax return instead of quarterly returns and if you expect to pay $5,000 or less in total annual wages.

If you’re not sure about some of these, consult with your accountant to make sure you’re providing accurate information to the IRS.

Submit Your Application

You can apply for an EIN online, by mail, or by fax. If you’re applying from abroad, you can also opt to apply by phone:

• Online: You can submit your application online through the IRS website. The process must be done in one session, and it will time out after 15 minutes of inactivity.
  
  Once you’ve completed the application and everything has been verified, you’ll receive your EIN immediately.
  
• Mail: Fill out and send Form SS-4 to the Internal Revenue Service, Attn: EIN Operation (or EIN International Operation if you’re not located in one of the 50 states or the District of Columbia), Cincinnati, OH 45999.
  
  It typically takes four weeks to process an application by mail.
  
• Fax: Fill out and send Form SS-4 to the IRS to one of three numbers: 855-641-6935 if you’re located in one of the 50 states or the District of Columbia; 855-215-1627 if you’re located in the U.S. but not in any state; or 304-707-9471 if you’re located outside of the U.S.
  
  If you provide your fax number on the application, you’ll receive your EIN within four business days.
  
• Phone: If you’re an international applicant, you can apply by calling 267-941-1099. Operating hours are Monday through Friday from 6 a.m. to 11 p.m. Eastern time. You’ll need to answer the questions from Form SS-4, but you won’t need to fill it out.

For most business owners, the online application will be the best option because it’s the easiest and fastest way to get an EIN. However, circumstances may require another method, so carefully consider your situation and needs before you decide how to apply.

Why Should a Business Get an EIN?

There are many reasons why a business should consider getting an EIN. In many cases, it may be required by the IRS. This is especially true if you have employees and need to file and pay payroll taxes.

You’ll also need one to file your business tax return if your company is structured as a partnership, corporation, or multi-member limited liability company.

Other situations where you might be required to get an EIN include:

• You’ve started a new business, and you either have or expect to have employees.
  
• You’ve hired employees or expect to hire employees (including household employees) and don’t already have an EIN.
  
• You want to open a business bank account, and the bank or credit union requires an EIN for the application.
  
• You’ve started a nonprofit organization.
  
• Your business has a Keogh plan.
  
• Your business is subject to excise, alcohol, tobacco, or firearm taxes.
  
• Ownership of the company has changed.
  
• You created a pension plan as the administrator, and it needs an EIN for reporting purposes.
  
• You’re administering an estate that needs an EIN to report estate income.
  
• You have a single-member LLC, a similar single-member entity, or an S corporation.

If you’re a sole proprietor with no employees, or you have a single-member limited liability company with no employees and are taxed as a disregarded entity, you can use your Social Security number to file your taxes instead of an EIN.

Even if you’re not required to have an EIN, it may still be a good idea to obtain one. In particular, you can’t establish a credit history for your business with your Social Security number. 

If you have plans for future growth that might require financing in some form or another, building a business credit history is essential.

When Do You Need a New EIN?

There are a few situations where you may need to obtain a new EIN, even if the business already has one. Cases can vary depending on the type of business structure you have.

Sole Proprietorship:

• Your take on partners and operate as a partnership.
  
• You incorporate your business.
  
• You’re subject to a bankruptcy proceeding.
  
• You purchase or inherit an existing business that you operate as a sole proprietorship. 

Corporation: 

• You’ve received a new charter from the secretary of state.
  
• You’re a subsidiary of a corporation using the parent company’s EIN, or you become a subsidiary of a company.
  
• You change your business structure to a partnership or sole proprietorship.
  
• You’ve merged with another business and created a new company.

Partnership:

• You incorporate your business.
  
• One partner takes over the business and operates it as a sole proprietorship.
  
• You end an old partnership and begin a new one.

Limited-Liability Company:

• You formed a new LLC with more than one owner.
  
• You formed a new LLC with one owner and chose to be taxed as a corporation or S corporation.
  
• You’ve formed a new LLC with one owner that has an excise tax filing requirement for tax periods beginning on or after January 1, 2008, or an employment tax filing requirement for wages paid on or after January 1, 2009.

If you’re unsure of whether you need an EIN for your particular situation, consult with a tax professional to get an idea of whether it’s a good idea. 

The Bottom Line

As a business owner, it’s important to have an EIN for your business whether or not you’re required to have one by the IRS. Fortunately, applying for an EIN is relatively easy, especially if you go through the online application on the IRS website.

If you don’t currently have an EIN for your small business, check to determine whether you need one. 

Even if you don’t, learn about the various benefits of having an EIN, such as the ability to build credit that’s separate from your personal credit score and the ease of getting a business bank account.

FAQs

Do I need an EIN for an LLC?

According to the IRS, an LLC needs an EIN if it has any employees or if it’s required to file certain excise tax forms. If you’re a single-member LLC and you chose to be taxed as a corporation or an S corporation, you’ll need an EIN.

Also, if you have a single-member LLC and your taxable income and loss will be reported by you, you’ll need an EIN if your state or bank requires it.

But if you have a single-member LLC that has no employees and no excise tax liability, and it’s a disregarded entity, you won’t need an EIN.

How much does an EIN cost?

It’s free to apply for an EIN through the IRS, and the process is relatively straightforward. If a company or individual offers to provide you with an EIN for a fee, it may be a scam, or at the very least, a bad business decision.

If you need an EIN for your business, the process is quick once you have all the required information, so there’s no reason for most business owners to pay someone else to do it on their behalf.

How can I get an EIN immediately?

The best way to get an EIN fast is to apply for one through the IRS website. The application doesn’t take too long, and once your information has been validated, you’ll get an EIN immediately.

You should also receive a PDF with your EIN, which you can hold onto for when you need it. You may also consider printing out a copy for your records. 

Note that if you decide to apply via fax, it’ll take up to four business days to get your EIN, and you’ll need to provide your fax number on the application, or else it’ll take longer. If you apply by mail, it’ll take four weeks.

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