How Do I Get An EIN Number for My Small Business?

Getting an EIN number is a critical step for many businesses, especially if you plan to hire employees or open a business bank account. If you’re navigating this process for the first time, you might be asking, “How do I get an EIN number?” Rest assured, this guide will clarify the steps, making it straightforward to obtain your Employer Identification Number from the Internal Revenue Service (IRS) efficiently.

What is an EIN Number?

An EIN, which stands for Employer Identification Number, is a unique nine-digit number. The Internal Revenue Service assigns this number to business entities operating in the United States. Think of it as a Social Security Number (SSN), but for your business; it’s a primary form of taxpayer identification for commercial operations.

This identification number is essential for a variety of business functions. You’ll need an EIN for filing your federal tax returns, opening a business checking account or savings account, and establishing business credit. The system of using an employer identification number helps the IRS track tax reporting and payments for businesses, a practice that has evolved with the tax system.

Historically, as businesses grew and tax laws became more detailed, the need for a distinct business identifier became clear. This identifier helps distinguish business tax obligations from an individual’s personal income tax. The EIN ensures accurate tracking of financial activities related to your enterprise, separate from your personal social security details, which is vital for preventing identity theft.

Who Needs an EIN Number?

Not every business entity is required to obtain an EIN, but a significant number are. Understanding whether your business falls into this category is important for compliance and smooth operations. This taxpayer identification is vital for many.

Here’s a more detailed look at who typically needs an EIN:

• Businesses that plan to hire employees. If you will be paying wages, you’ll need an EIN to report employment taxes.
• Any business that operates as a corporation or a partnership. This includes S corporations and C corporations, as well as multi-member limited liability companies (LLCs) electing to be taxed as corporations or partnerships.
• Businesses that file tax returns for excise, alcohol, tobacco, and firearms. These specialized industries have specific federal tax reporting requirements.
• Businesses that operate a Keogh plan, which is a type of retirement plan for self-employed individuals and small businesses.
• Entities involved with certain types of trusts (excluding certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns), estates, real estate mortgage investment conduits (REMICs), and non-profit organizations.
• Sole proprietors who decide to incorporate or who acquire an existing business and operate it as a sole proprietorship.
• Indian tribal governments and their subdivisions that conduct business activities often require an EIN for tax administration.

If you are a sole proprietor with no employees and none of the other conditions apply, you might technically be able to use your Social Security Number for business taxes. However, obtaining an EIN is still a good idea for a sole proprietorship. It can help separate your personal and business finances, add a layer of professionalism, and is often required for opening a business bank account or applying for business credit cards.

For a limited liability company (LLC), the requirements can vary. A single-member LLC that is a “disregarded entity” for tax purposes might use the owner’s SSN, but will need an EIN if it elects to be taxed as a corporation or if it hires employees. Understanding your specific business structure is important.

How to Get an EIN Number: Step-by-Step Guide

Ready to secure your Employer Identification Number? The process is managed by the Internal Revenue Service and is free. Here’s a detailed guide to help you apply for this crucial identification number for your small business.

1. Check Your Eligibility

Before you begin the application, confirm your eligibility. The principal business, office, or agency, or legal residence (in the case of an individual) must be located in the United States or U.S. Territories. The person applying online, known as the “responsible party,” must have a valid Taxpayer Identification Number (TIN), which can be a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or an existing EIN if applying on behalf of certain business types.

The responsible party is the individual who ultimately owns or controls the entity, or who exercises ultimate effective control over the entity. There can only be one responsible party per EIN application. Understanding these criteria is the first step toward a successful application for your federal tax ID.

2. Choose Your Application Method

The IRS offers several methods to apply for an EIN. Each method has its own processing time and procedure. Choosing the right one depends on your preferences and the speed at which you need the number.

Application Method	Details	Processing Time
Online	The fastest and preferred method. Available via the IRS website during specific hours (Monday to Friday, 7 a.m. to 10 p.m. Eastern time).	Immediate (EIN issued upon successful completion)
By Fax	Complete Form SS-4, Application for Employer Identification Number, and fax it to the appropriate IRS fax number. Available 24/7.	Approximately 4 business days (if a return fax number is provided)
By Mail	Complete Form SS-4 and mail it to the designated IRS address. This is the slowest method.	Approximately 4-5 weeks
By Phone (International Applicants Only)	International filers who do not have a U.S. presence or U.S. taxpayer identification can call a specific IRS phone line. Available Monday to Friday, 6 a.m. to 11 p.m. Eastern time.	EIN provided over the phone upon successful completion

For most U.S.-based businesses, the online application is the most efficient path to getting your employer identification number. It allows for quick processing and immediate receipt of the EIN, which can be critical when you need to open a bank account or hire employees right away.

3. Gather Necessary Information

To complete the application smoothly, whether online, by fax, or mail using Form SS-4, gather all required information beforehand. Being prepared will save you time and prevent errors. You will typically need:

• The legal name of the entity (and trade name or “doing business as” (DBA) name, if applicable).
• The mailing address for the business. For a sole proprietor, this might be a home address.
• The name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner, or trustor. This individual is the responsible party.
• The type of business entity (e.g., sole proprietorship, partnership, corporation, LLC, estate, trust). You will need to understand your business structure.
• The primary reason for applying for an EIN (e.g., starting a new business, hired employees, banking purposes, changed type of organization).
• The date the business was started or acquired.
• The closing month of your accounting year.
• The highest number of employees (if any) expected in the next 12 months (full-time, part-time, agricultural). This is particularly relevant if you plan to hire employees.
• The principal activity of your business and the principal line of merchandise sold, specific construction work done, or type of service offered.

Having this information ready makes filling out Form SS-4 or the online application much quicker. This preparation is crucial for an accurate application for your taxpayer identification.

How to Apply Online (Recommended Method)

The online EIN application is the IRS’s preferred method due to its speed and convenience. Once you start the online session, you must complete it in one sitting; you cannot save and return later. The session will time out after 15 minutes of inactivity.

Here’s a general outline of the online process:

1. Visit the official IRS website and navigate to the “Apply for an Employer Identification Number (EIN) Online” page.
2. Confirm your eligibility and click the “Apply Online Now” button.
3. The system will guide you through a series of questions about your business type, reason for applying, responsible party details, business address, and other relevant information.
4. Carefully review all your answers for accuracy before submitting. Errors can cause delays or issues with your federal tax filings.
5. Upon successful validation of your information, you will receive your EIN immediately on a confirmation screen. It’s important to save or print this confirmation for your records.

This instant employer identification number allows you to proceed with essential business tasks like opening a business bank account or setting up payroll for new employees without delay. Many financial institutions require this number before offering services like a business credit card or processing applications for personal loans intended for business capitalization, though it’s important to distinguish between personal and business finances.

How to Apply by Fax or Mail

If applying online is not feasible, you can use Form SS-4, “Application for Employer Identification Number.” Download the latest version of Form SS-4 from the IRS website. Fill it out completely and legibly.

For fax applications, send the completed Form SS-4 to the IRS fax number listed in the form’s instructions. If you provide your return fax number, you can generally expect to receive your EIN by fax within about four business days. For mail applications, send the completed Form SS-4 to the IRS mailing address also found in the form’s instructions. This method is the slowest, with processing times often taking four to five weeks.

Whether applying by fax or mail, accuracy on Form SS-4 is critical. Ensure all information aligns with your business structure and legal documentation. Errors could necessitate an amended return or correspondence with the IRS to correct details for your taxpayer identification number.

After You Get Your EIN

Once your EIN is issued, it becomes a permanent identification number for your business for federal tax purposes. Keep a record of your EIN in a safe and accessible place. You will need it for numerous business activities and tax filings.

Here are some important points to remember after receiving your EIN:

• Your EIN is permanent and generally does not change, even if you change your business name or location. However, significant changes in business structure (e.g., a sole proprietor incorporating) usually require a new EIN.
• If you misplace your EIN, you can find it on previous tax returns, bank statements, or business credit reports. You can also call the IRS Business & Specialty Tax Line to retrieve it after verifying your identity.
• You must use your EIN when you file your business tax return, including income tax returns, and any employer’s quarterly federal tax return (like Form 941).
• Provide your EIN to entities that pay you as an independent contractor (they will use it for Form 1099). Similarly, you’ll need to collect W-9 forms (which include the payee’s TIN) from contractors you pay.
• Use your EIN to open a business bank account or savings accounts, apply for business credit, and establish accounts with vendors. This helps build your business credit profile, which can be distinct from your personal credit score.
• If you hire employees, you’ll use the EIN for payroll processing, withholding taxes, and issuing Form W-2s. You’ll also need it for managing employees’ withholding certificate information.
• Keep the IRS informed of any changes to your business address or the responsible party associated with your EIN. This can be done by filing Form 8822-B, Change of Address or Responsible Party – Business.

Safeguarding your EIN is also important to prevent identity theft. Treat it with the same care as your Social Security Number. Having an EIN helps protect your personal SSN from being overused in business transactions, adding a layer of security.

Common Questions About Getting an EIN

Many business owners, especially those new to entrepreneurship or dealing with changes in their business structure, have questions about EINs. Here are answers to some frequently asked questions regarding this employer identification:

How long does it take to get an EIN?

The processing time varies by application method. If you apply online through the IRS website, you will receive your EIN immediately upon completion of the application. Applications submitted by fax typically take about four business days if you provide a return fax number. Applying by mail is the slowest option, potentially taking four to five weeks for the IRS to process Form SS-4 and mail your EIN confirmation.

Is there a fee to get an EIN?

No, obtaining an EIN from the IRS is a free service. You should be cautious of websites or services that attempt to charge a fee for obtaining an EIN. You can apply directly with the IRS at no cost. Tax pros may charge a fee if they complete the application as part of a larger service package, but the IRS itself does not charge.

Can I apply for more than one EIN for my business?

Generally, a single business entity needs only one EIN. However, certain situations necessitate a new EIN. These include changes in business structure (e.g., a sole proprietorship becoming a corporation or partnership, or a corporation becoming a sole proprietorship), purchasing or inheriting an existing business that you operate as a sole proprietor, or if you are subject to a bankruptcy proceeding that creates a new entity. Simply changing the business name or location does not usually require a new EIN.

Do I need a new EIN if I change my business name?

A business name change alone typically does not require a new EIN. You would report the name change to the IRS when you file your next tax return under the new name. However, if the name change is associated with a change in your business structure (e.g., forming a corporation from a sole proprietorship), then a new EIN would likely be required. It’s important to understand these distinctions to maintain proper federal tax records.

Do sole proprietors need an EIN?

A sole proprietor without employees who does not file excise or pension plan tax returns might not be required to have an EIN; they can use their Social Security Number for business tax purposes. However, many sole proprietors choose to get an EIN. It is needed if the sole proprietorship decides to hire employees, operates a Keogh plan, incorporates, or files for bankruptcy. Additionally, banks often require an EIN to open a business checking account, and it can help separate personal and business finances and prevent identity theft by limiting the use of your SSN for business purposes. Many sole proprietors find it beneficial for building business credit.

What is Form SS-4?

Form SS-4, “Application for Employer Identification Number,” is the official IRS document used to apply for an EIN when not applying online. It collects all the necessary information about your business, its structure, and the responsible party. This form can be downloaded from the IRS website and submitted by mail or fax. It is one of the popular forms for businesses interacting with the Internal Revenue Service.

How does an EIN help with business credit?

An EIN is essential for establishing a credit profile for your business that is separate from your personal credit history. Lenders and credit reporting agencies use the EIN to track your company’s financial history and payment behavior. Building good business credit can help you qualify for loans, better terms with suppliers, and business credit cards, often without relying solely on your personal credit score, which is particularly helpful if you have bad credit personally but a strong business plan.

It’s important to note that simply having an EIN doesn’t automatically grant you business credit. You need to actively work on building a positive credit history under that EIN by managing your finances responsibly, paying bills on time, and potentially opening lines of credit specifically for your business, like a business credit card rather than personal credit cards.

What should I do if I make an error on my EIN application?

If you realize you made an error on your EIN application after it has been submitted and an EIN assigned, do not apply for a new EIN. The approach to correcting an error depends on the type of error. For minor typographical errors or changes in address, you can typically notify the IRS in writing or by filing specific forms like Form 8822-B. For more significant errors related to the business structure or responsible party, it’s best to contact the IRS Business & Specialty Tax Line for guidance on how to proceed. This might involve sending a letter explaining the correction needed for your taxpayer identification.

Can I use my EIN for a personal loan?

Generally, no. An EIN is an Employer Identification Number, or a federal tax identification number, issued to business entities. Personal loans are typically tied to your individual credit history and Social Security Number. While funds from a personal loan might be used to capitalize a business, the loan itself is usually associated with you as an individual, not directly with the business’s EIN. Financial institutions will use your SSN and individual income tax return details for personal loan applications, not your business’s employer identification.

How Bumbaugh | George | Prather | DeDiana Can Help

While the process of obtaining an EIN is generally straightforward, forming and managing a business involves many legal and financial considerations. The team at Bumbaugh | George | Prather | DeDiana consists of experienced business law attorneys. We can assist you with many aspects of your business journey.

We can help you understand the differences between a sole proprietorship, partnership, limited liability company (LLC), and corporation. Choosing the correct business structure impacts your liability, taxation, and administrative requirements. Our guidance can help you make an informed decision that aligns with your business goals and personal financial situation.

Furthermore, we can help you comprehend the tax implications associated with different business entities, ensure your operations comply with state and federal regulations, and manage legal issues that may arise. From drafting contracts to navigating employment law when you hire employees, or understanding requirements for retirement plans, our support can be valuable. We aim to help your small business start correctly and maintain a solid legal foundation, potentially saving you from issues related to an incorrect installment agreement request or other tax statement problems.

Conclusion

Securing an EIN number is a fundamental step in establishing and operating your business legally and efficiently. This identification number is essential for numerous activities, from filing your federal tax return and opening a business bank account to managing payroll when you hire employees and building business credit. As outlined, you can often obtain your EIN from the Internal Revenue Service in just a few minutes by applying online.

Remember that while the EIN application itself is simple, the broader landscape of business formation and compliance has many facets. Whether you are a sole proprietor just starting or an established company considering a structural change, having accurate information and proper guidance is important. This helps ensure your business is set up for sustained success and can manage its financial obligations, like estimated taxes or an installment agreement if needed, correctly from the beginning, contributing positively to its growth and even impacting things like your ability to make contributions to tax-exempt bonds if applicable.

Understanding the role of your EIN in processes like filing an individual income tax return (for pass-through entities) or an employer’s quarterly federal tax return, and managing documents like an employee’s withholding certificate, will serve your business well. From understanding direct deposit for tax refunds to knowing when an amended return is necessary, your EIN is a central piece of your business’s financial identity.