Key Takeaways

  • An EIN (Employer Identification Number) is required for many business entities and certain tax-related activities.
  • You can apply for an EIN number online, by fax, mail, or phone (for international applicants).
  • The IRS online application is the fastest and preferred method for most applicants.
  • EINs are necessary for tasks such as hiring employees, opening business bank accounts, and filing taxes.
  • Even sole proprietors with no employees often apply for an EIN to avoid using their SSN and to separate personal and business finances.
  • Businesses that restructure, such as converting to a different entity type, typically need a new EIN.
  • Errors during the application can delay approval or require re-application, so accuracy is key.

EIN requirements are specific in nature and necessary to indicate a company is recognized in the United States as a tax-paying entity. An EIN, also known as an Employee Identification Number or Federal Income Tax ID Number, is used to complete tasks such as opening a business credit card, opening a business bank account, or filing business taxes. This eliminates the use of having to use a personal Social Security Number.

Determining If You Need an EIN

The specific reasons why you would need an EIN includes the following:

  • The business has employees.
  • The business is operated as a corporation or partnership.
  • The business withholds income tax or other purposes related to payment of wages to a non-resident alien.
  • If a person is a part of a trust, estate, Keogh plan, farmers cooperative, real estate mortgage investment organization, or plan administration.
  • If taxes are filed on excise, tobacco, alcohol, firearms, or employment.

If the entity is a sole proprietorship or single-member LLC and doesn't have any of the above conditions, an EIN is not required and the proprietor or member can use their Social Security Number. While this is possible, most single member business owners will still acquire an EIN to protect themselves from identity theft and to give them the ability to separate business and personal transactions and accounts.

EIN Requirements

In order to receive an EIN, the business must be located within the United States and the person who is applying must have a Social Security Number or Taxpayer Identification Number. The type of entity applying for an EIN can fall into a range of organization types including:

  • Sole proprietorships
  • Partnerships
  • Limited liability companies (LLCs)
  • Corporations
  • Government agencies
  • Nonprofits

Regardless of the type of entity, there is not a size requirement or limitation to the number of employees. From a sole proprietorship with one owner to a corporation with thousands of employees, both can apply for an EIN. If the person applying does not have a Social Security Number, they will have to obtain an individual Tax Identification Number before they apply for a business EIN. To do this, file form W-7 with the IRS.

When You Need a New EIN

A business may need to apply for a new EIN number if it undergoes certain structural or ownership changes. Common scenarios include:

  • A sole proprietorship incorporating or forming a partnership.
  • A partnership incorporating or being taken over by one of the partners.
  • A corporation receiving a new charter from the secretary of state.
  • An LLC choosing to be taxed as a corporation (or vice versa).
  • A corporation becoming a subsidiary of a new company.
  • An individual who previously owned a sole proprietorship buys or inherits an existing business.

However, not all changes require a new EIN. For instance, a change in business name or address, or changes in tax year, generally do not necessitate a new number.

Obtaining an EIN

To obtain an EIN, the process begins with preparing IRS form SS-4 for the business. The form, when completed, must be submitted to all relevant agencies. When completing the form, be sure to have the following listed with correct information:

  • Legal name of the business.
  • Legal name of the person applying.
  • Trade name, if applicable.
  • Mailing address, street address, country,and state where the business is located.
  • Name and Social Security Number or EIN of the responsible party.

You will also need to supply the following information:

  • What type of business entity is requesting the EIN.
  • The number of members, if you are applying as an LLC.
  • The state or country where incorporation took place, if you are applying as a corporation.
  • The date the business was started or acquired.
  • The maximum number of employees expected in the next twelve months and the first date wages were paid.
  • The primary activities of the business.

The most efficient way to apply is online and takes a day to complete typically. For those who would prefer to mail or fax in IRS form SS-4, the completion time will be longer. Fax applications take about four business days and your EIN will be faxed to you. If the application is mailed, the return time is about four weeks. For any business that is located outside the United States, applications can only be received by phone or mail.

Any sole proprietorships and general partnerships that change their corporate structure must reapply for a new EIN. This also applies to any corporation or LLC that reforms.

How to Apply for EIN Number Online or Offline

There are four primary methods to apply for an EIN number through the IRS:

  1. Online Application (Recommended)
    • Available to entities with a principal business located in the U.S. or U.S. Territories.
    • Applicants must have a valid Taxpayer Identification Number (SSN, ITIN, or EIN).
    • The session must be completed in one sitting; otherwise, the session will expire.
    • The EIN is issued immediately upon successful completion.
  2. Apply by Fax
    • Complete IRS Form SS-4 and fax it to the appropriate number.
    • Processing typically takes up to four business days.
    • Include your return fax number to receive the EIN faster.
  3. Apply by Mail
    • Mail the completed Form SS-4 to the IRS.
    • This method takes about four weeks to process.
    • Best for applicants who are not in a rush.
  4. Apply by Phone (For International Applicants Only)
    • Call 267-941-1099 (not a toll-free number).
    • Available Monday through Friday, 6:00 a.m. to 11:00 p.m. Eastern Time.
    • Only for applicants without a legal residence or principal place of business in the U.S.

Important Tip: Ensure all information on the SS-4 form is accurate and complete. Inaccuracies can lead to delays or rejection.

Common EIN Application Mistakes to Avoid

To prevent delays or rejections when you apply for an EIN number, avoid the following common mistakes:

  • Using an incorrect or incomplete business name.
  • Submitting an SS-4 without designating a responsible party.
  • Applying without a valid taxpayer identification number.
  • Selecting the wrong business entity type.
  • Failing to provide the date the business was started or acquired.
  • Omitting expected employment or tax filing details, if applicable.

Always double-check your information before submission. The online application won’t allow corrections once it’s submitted.

How Long It Takes to Get an EIN

The time it takes to receive your EIN depends on how you apply:

  • Online: Immediate issuance upon completion.
  • Fax: Approximately 4 business days.
  • Mail: Typically 4 weeks.
  • International (Phone): Issued during the phone call.

Businesses are advised to apply for their EIN well in advance of any filing deadlines or banking needs to ensure ample processing time.

What to Do After You Get Your EIN

After you successfully apply for an EIN number and receive it, you should:

  • Store the EIN confirmation letter in a safe place.
  • Use the EIN when filing business tax returns, opening a business bank account, and applying for business licenses.
  • Notify your payroll provider and update tax forms if hiring employees.
  • Update any relevant records with vendors or financial institutions that require your EIN.

If you misplace your EIN, you can find it on prior tax returns or call the IRS Business & Specialty Tax Line at 800-829-4933.

Who Can Apply for an EIN

Only a responsible party can apply for an EIN number. The IRS defines a responsible party as the person who ultimately owns or controls the entity, or who exercises ultimate effective control. This person must have a valid SSN, ITIN, or EIN to apply online.

For most small businesses, the responsible party is the business owner or principal officer. Only one EIN can be issued per responsible party per day if using the online application method.

Where is an EIN Used

An EIN is used for many important business functions including:

  • Opening financial accounts.
  • Tracking company records including invoicing, which allow a company to pay bills and collect debts.
  • Hiring employees.
  • Paying taxes and complying with tax law.

The EIN is used by the IRS for federal tax reporting, however, some states also require that a business file for a state-level Tax Identification Number.

Frequently Asked Questions

  1. Do I need an EIN if I'm self-employed?
    Not necessarily. If you're a sole proprietor with no employees, you can use your SSN. However, many choose to apply for an EIN number to separate business and personal finances.
  2. Can I get an EIN if I don’t live in the U.S.?
    Yes. International applicants can apply for an EIN by phone or mail. Online applications are only available for businesses with a U.S. presence.
  3. Is there a fee to apply for an EIN number?
    No, the IRS provides EINs at no cost, regardless of the method of application.
  4. Can I cancel an EIN once it’s issued?
    No, EINs are never reused or reassigned. However, if you close your business, you should notify the IRS to close your account.
  5. What if I entered incorrect information on my EIN application?
    You’ll need to contact the IRS directly or file a written request to correct the information. In some cases, a new EIN may be required depending on the changes.

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