What Is an EIN? Everything You Need To Know

An EIN, also known as an Employer Identification Number or a Federal Employer Identification Number, is a unique nine-digit number that is used by the IRS to identify your business. This number can be highly beneficial to your business in many different scenarios, but it may also be required as part of your tax liability, depending on several factors.

In this article, we will be discussing exactly what an EIN can be used for and what makes it beneficial to have. Then, we will be giving you information on which business entity types may need an EIN and how you apply for one, so you are fully prepared to complete this important step in running your business.

What Is an EIN?

As we mentioned above, an Employer Identification Number (EIN) is a nine-digit number that is unique to your business and can be used to identify your business on important tax documents. You can think of your business’s EIN number as a social security number – it will be used to file taxes, identify your business on government documents, hire employees, and can be used to secure business financing. You will apply for your EIN through the IRS, and there is no fee for the application.

It is important to keep in mind that your business will need to be established before you apply for an EIN. This means that if you are starting an LLC, you will need to ensure that your Articles of Organization or a similar document is processed by your LLC’s operating state before you file for an EIN.

Additionally, if you change business structures, you may be required to apply for a completely new EIN to help identify your business with the IRS. More information on this can be found here.

Does Your Business Need an EIN?

In general, the IRS requires that your business obtains an EIN if any of the following are true:

  • Your business will hire employees
  • Your business is operated as a corporation or partnership
  • You will need to file excise, employment, alcohol, or tobacco tax returns
  • You withhold taxes on income

A more complete list of general requirements that indicate you will need to obtain an EIN can be found on the IRS’s website here. Below, we will give you a breakdown of when each business type may or may not be required to obtain an EIN.

Sole Proprietorships

Sole proprietorships that don’t have employees and will not be filing excise or pension plan tax returns are not required to obtain an EIN. That being said, it may be beneficial to obtain an EIN to help protect your identity and assets – we talk about this more below.

If your sole proprietorship will be hiring employees or you will be filing certain tax returns, you will be required to apply for an EIN.


Partnerships are required to apply for an EIN regardless of any employees hired or other tax returns they may file. Partnerships are also liable to file certain tax returns with the IRS, including a US Return of Partnership Income, employment taxes, and excise taxes. More information on this can be found here.

Limited Liability Companies

Single-member LLCs are not required to obtain an EIN as long as they do not hire employees or have any excise tax liability. However, many single-member LLCs do choose to acquire an EIN anyway as it can help protect assets and further establish the LLC as a separate business entity.

Multimember LLCs are treated similarly to partnerships and will be required to obtain an EIN no matter what. In-depth tax information on this business structure can be found here.


Corporations (both S and C corporations) are required to apply for an EIN through the IRS. This is because the corporation is treated as a separate entity; an EIN is essential for filing separate corporate tax returns both federally and with your business’s state of operation.

Nonprofit Organizations

Nonprofit organizations are treated as completely separate business entities and will be required to obtain an EIN for specific tax reporting purposes.

Trusts and Estates

In certain cases, decedents and executors of both estates and trusts will be required to apply for an EIN before filing specific tax forms associated with the trust or estate. The IRS provides more information about this process here.

The Benefits of Using an EIN

Even if the IRS doesn’t require you to obtain an EIN for your business, there are several benefits that you may be able to access by filing for one anyway. Remember, an EIN is free to request, so there is nothing to be lost by applying for one if you deem the following benefits worth it.

Separate Finances

When you open a business, especially one that is functioning as an LLC or a sole proprietorship, your personal assets may become somewhat entangled with your business income and assets. To create a stronger delineation between the two and to maintain a corporate veil, you may want to obtain an EIN. With an EIN, you will not need to use your personal social security number on tax forms and can often make your EIN public record, which may build trust between your customers and your business.

Additionally, many banks, credit agencies, and business loan companies will request your EIN as you apply for business financing. No matter your business’s structure, having an EIN on hand will help to establish your business as legitimate and may help you secure funding or open certain business bank accounts.

Hire Employees

Regardless of your business’s individual structure, you may need to hire employees at some point to help run your business and grow it into something even more profitable. The only way to legally hire employees is to first obtain an EIN through the IRS. Once you have your EIN, you will be able to pay the taxes associated with being an employer and continue your business’s growth.

Protect Your Identity

A very important benefit of an EIN is the ability to protect your identity with it. If you are not required to obtain and use an EIN for tax filing and other official documentation purposes, you will need to use your personal social security number. This can increase your risk of identity theft and may make both your business and personal assets more liable to fraud.

You may also find that customers trust your business more when you are able to make public the EIN and that obtaining business financing is much easier when using your EIN versus a personal social security number.

How To Request an EIN for Your Business

If you know that you will need or want an EIN for your business, you can follow these steps below to file for one. Make sure that your business entity is officially established in whichever state you are operating out of before filling in the IRS EIN application. Your EIN will never expire, but you may be required to obtain a new one if your business’s structure changes.

You can file for an EIN either online or through the mail, though if you are a foreign filer, you will need to request your EIN through the mail or over the phone.

To reach the IRS for any other questions or inquiries, you can call this number (800) 829-4933 during the hours of 6 am to 11 pm EST Monday through Friday.

Online Application

Filing for your EIN online is the preferred application method. For this method, you will need to visit the IRS’s online EIN application here. From there, select the option to apply for an EIN and follow the instructions.

You should note that the application must be filled out completely in one sitting and will ask you questions about yourself and your business. The application will take approximately 15 minutes to complete, and you will receive your EIN immediately upon submittal of the form.

Only businesses in the United States or US territories are eligible to file for an EIN online.

Filing By Mail

If you would like to file your EIN application through the mail, you will need to fill out Form SS-4. Make sure that this form is completely accurate and filled out with the most up-to-date information. Once the form is completed, you must mail it in a secure envelope to the address below. It takes approximately four weeks for an EIN application to be processed through the mail.

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

You may also send the completed form via fax to this number: (855) 641-6935. Forms that are sent via fax will be given a return fax (make sure to include a return fax number) within four business days of your application receipt.

Applying Over the Phone

Applying over the phone is typically reserved for foreign filers or international EIN applications. For this method, you will need to call this number – (267) 941-1099 – between the hours of 6 am to 11 pm Monday through Friday.

It is important to note that this number is not a toll-free number and that the person making the phone call must be authorized to answer all of the questions found on Form SS-4.

Making the Most Out of Your Business

Obtaining an EIN can bring with it many benefits and is an essential and often required step in running your business. Besides protecting your identity and helping to establish your business as a separate entity further, an EIN can allow you to acquire business financing more easily. It is also a necessary step for paying business taxes and ensuring that you stay ahead of major tax fines or penalties.

As you begin to run your business, make sure to check your eligibility requirements for obtaining an EIN with the IRS and then fill out the free online application if applicable. Before you know it, you’ll have your EIN and be on your way to making the most out of your business.

Team BusinessNerd

Our team of legal experts and business professionals have years of experience and are dedicated to providing accurate and up-to-date information to our readers.

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