Key Takeaways

  • Startups typically need an EIN (Employer Identification Number) for tax reporting, banking, hiring, and compliance.
  • Even single-member LLCs or corporations without employees often benefit from getting an EIN early.
  • Applying for an EIN is free and can be done online, by fax, or by mail, but online is the fastest.
  • International founders can apply even without a U.S. SSN, typically by using Form SS-4 and calling the IRS.
  • EINs are critical for startups to open bank accounts, apply for credit, pay employees, file taxes, and build business credit.

EIN: What is it?

EIN is an Employer Identification Number that serves as your business’ social security number. It is a unique 9-digit number that your business will use for all federal and state tax filings. This number is permanent throughout the life of the business unless ownership or legal structure is changed.

Why Startups Need an EIN

For startups, an EIN is more than just a tax identifier — it’s essential for establishing a professional business presence. Even if your startup has no employees, you will likely need an EIN to:

  • Open a U.S. business bank account
  • Apply for venture capital or investor funding
  • File corporate taxes separately from your personal taxes
  • Obtain state or local business licenses
  • Establish business credit and vendor accounts

Having an EIN can also simplify working with contractors, managing payroll, and maintaining good standing with the IRS. For startups planning to scale, it’s a key step to ensure smooth financial operations.

The EIN may also be required to:

  • Open a business checking account
  • Acquire a line of credit or other funding
  • Create accounts with various vendors

Depending on the form you are completing, an EIN may be referred to as the Tax Identification Number (TIN) or the Federal Employee Identification Number (FEIN) but they are the same number.

Do you need an EIN?

The primary businesses that require an EIN are:

  • All Corporations
  • Limited Liability Companies with more than one member
  • All businesses with employees, including sole proprietorships and LLCs with one member
  • Any business when the owner has a Keogh (retirement) plan.
  • Any business that files Employment, Excise, or Alcohol, Tobacco and Firearms tax returns.

If any of these situations fit your business, you must apply for an EIN.

Special Considerations for Startups

Startups incorporated in states like Delaware (a common choice for tech startups) are often required to obtain an EIN, even if they are pre-revenue. Furthermore, startups with non-U.S. founders can apply for an EIN without a Social Security Number (SSN) by submitting IRS Form SS-4 and calling the IRS directly, since the online application system requires a valid SSN or ITIN.

Key points for startup founders:

  • Delaware C-Corporations: Typically need an EIN immediately after incorporation.
  • Non-U.S. Founders: Must apply by fax or mail since the online system requires an SSN.
  • Single-Member LLCs: Even without employees, getting an EIN helps separate personal and business finances.

Applying for an EIN

This is a free service offered by the Internal Revenue Service. You can apply online or by fax or mail with Form SS-4. This one page form requires specific information that includes:

  • Legal Name of the business
  • Trade Name of the business, if different
  • Mailing Address and Street Address (if different)
  • County and State where principal business is located
  • Name of the Responsible Party and their SSN, ITIN or EIN
  • Whether the company is an LLC and number of members
  • Type of Entity
  • Reason for Applying
  • Number of Employees
  • Type of Business

The Responsible Party is someone who is active in the business such as an owner or partner. There is a Third Party Designee section of the application but it is rarely used unless you own more than one business or have someone else operating the company.

The IRS prefers online EIN applications over all other forms and you will receive your number immediately.

Tips for Applying for an EIN as a Startup

When applying for an EIN for startups, follow these best practices:

  • Use the Correct Entity Type: Select the right entity type on Form SS-4 (LLC, Corporation, etc.) to avoid delays.
  • Have Key Information Ready: Ensure you have the responsible party’s name and taxpayer information, even if they are an international founder.
  • Apply Early: Do this soon after incorporation to avoid delays in opening bank accounts or paying employees.
  • Online vs. Fax/Mail: U.S.-based founders can use the online portal for instant issuance; international founders will need to submit by fax or mail and can call the IRS for faster processing.

For startups that plan to issue stock, raise capital, or onboard employees, securing an EIN early is critical.

Frequently Asked Questions

  1. Why does my startup need an EIN if I have no employees?
    Even without employees, an EIN is essential for opening a business bank account, paying taxes, and separating personal and business finances.
  2. Can non-U.S. founders get an EIN for their U.S. startup?
    Yes, non-U.S. founders can apply by submitting Form SS-4 to the IRS and calling for processing, even without a Social Security Number.
  3. How long does it take to get an EIN for a startup?
    Online applications yield an immediate EIN, while fax or mail applications can take several weeks. International applications may require a phone follow-up.
  4. What happens if I apply for an EIN with the wrong entity type?
    Using the wrong entity type can lead to tax filing errors. It’s best to consult a professional or carefully follow IRS instructions to avoid complications.
  5. Do I need a new EIN if my startup changes structure?
    Yes, certain structural changes, such as converting from an LLC to a corporation, usually require a new EIN.

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