1. Does Your Business Need an EIN?
2. How to Obtain an Employee Identification Number

Learning how to obtain an EIN number for business is quite easy and can be done online, provided you have the key pieces of information needed. Should you choose, you do have the option of obtaining your business' EIN from the IRS over the phone or via fax, as well.

So, what exactly is an EIN? An EIN is an Employer Identification Number (sometimes also called a tax ID number or taxpayer ID) that is assigned by the Internal Revenue Service. Most companies are required to have one; essentially, if your company has employees you must have an EIN. However, if you are a sole proprietorship, not employing others, you can usually use your Social Security Number. An EIN basically serves the same purpose as a Social Security Number as it used in regard to tax obligations.

The Internal Revenue Service uses the EIN for these primary purposes:

  • Identifying those businesses that are doing business in the United States and US territories, such as Puerto Rico and the US Virgin Islands
  • Keeping track of said businesses for tax purposes
  • Identifying the businesses that are being worked for, by employees filing tax returns

Does Your Business Need an EIN?

Most businesses are required to have an EIN. Generally speaking, if your company is a sole proprietorship, or an LLC (limited liability corporation) that does not have employees, you will need to obtain an EIN from the IRS. With that said, if you are sole proprietorship who files pensions or excise tax returns, then your Social Security Number will not suffice, and you will need to have an EIN. Additionally, if your business is identified as a partnership, even if you don’t have employees outside of the partners, an EIN is required.

Some additional circumstances under which an EIN is required include:

  • An already-existing business is obtained by someone who then decides to operate it as a sole proprietorship
  • The structure of the business changes from having been a sole proprietorship, becoming either a partnership or a corporation
  • A business that had once been either a partnership or corporation changes its structure to then become a sole proprietorship
  • If the business had a sole owner who passed away and the business is now being taken over by that individual’s estate

Additional questions to ask yourself as you decide whether or not your business needs to obtain an EIN include:

  • Does your company have employees other than yourself?
  • Is your business operating as either a corporation or partnership?
  • Is your business required to file an Employment, Excise, Alcohol, Tobacco, or Firearms tax when filing your tax returns?
  • Does your company withhold taxes on income paid to a non-resident alien, aside from that of employment wages?
  • Do you have a Keogh Plan?
  • Is your company involved with IRAs, estates, trusts, or Exempt Organization business income tax returns?
  • Is your business involved with real estate?
  • If your company engaged in real estate or mortgage investments?
  • If your company involved with either nonprofit organizations or farmers cooperatives?
  • Is your business involved with plan administration?

As you can see, there are a great many circumstances under which a business, even one sans employees, may be required to have an EIN.

How to Obtain an Employee Identification Number

How do you go about obtaining one from the IRS? Lucky for you, it is quite easy and can be accomplished online, although you do have the option of doing via fax, telephone or in-person, should you choose.

You will be required to provide some fairly basic information to the IRS regarding your business, such as the business structure, name, address, phone number, and such. If you are the one contacting the IRS, you will also be required to provide your personal contact information. In the event that you have designated someone else to take on this task, they will be considered the responsible party and will need to have their own valid Social Security Number.

While it may take a couple of weeks for your business’ new EIN to become a part of the permanent record within the IRS, you can begin using it immediately. This ability is particularly useful, as you will need it when obtaining business licenses and opening business accounts at your bank or financial institution.

If you need help with obtaining an EIN for a business, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.