There are several important facets to starting a business — from devising a novel idea to building a great team to get your venture off the ground. One of the first steps you will need to do is get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Aside from the business permits and licenses you need to obtain to operate a business in the United States, an EIN is necessary to conduct activities, such as opening a business bank account and hiring employees. It serves as a tax identification number.
An EIN works similarly to a Social Security Number (SSN). Both are unique nine-digit numbers assigned to individuals or entities for identification purposes. However, an EIN is for business taxation and reporting, while an SSN is primarily for individual taxation.
Unlike an SSN, the IRS does not tie an EIN to an individual. This means that a business can have the same EIN even if the ownership or structure of the company changes over time.
Getting an EIN is a simple process. You can apply for one online, by mail, or by fax.
Follow these steps to get an EIN:
Step 1 of 4: Determine your eligibility for an EIN
In general, businesses with employees need an EIN. However, for tax purposes and to conduct activities, including opening a business bank account or applying for loans, you may need an EIN even if your business does not have any employees.
There are a few exceptions:
- Businesses without employees and those that report their taxes using the owner’s Social Security Number
- Household employers
- Certain trusts, estates, and non-profit organizations
Eligibility based on entity type:
Sole Proprietorship / Individual
Most sole proprietors do not need an EIN since they can use their Social Security Number instead. However, there are a few exceptions:
- If you have to file any of the following tax returns:
- Employment Tax Returns
- Excise Tax Returns
- Alcohol, Tobacco, and Firearms Tax Returns
- Pension or annuity returns
- Estate or trust income tax returns
- Partnership Tax Returns (Form 1065)
- Corporation Income Tax Returns (Form 1120, 1120-A, or 1120-S)
- If you have employees
- If you operate your business under a trade name other than your legal name
- If you are required to file quarterly tax returns for estimated taxes
- If you are a household employer
Partnership
All general and limited partnerships must have an EIN to file their annual tax return and conduct certain business activities. However, there are a few exceptions:
- If the Partnership consists of only one general partner and no limited partners
- If all partners are natural persons and are not required to file an annual return
Limited Liability Company (LLC)
LLCs with more than one member must have an EIN. LLCs with only one member may use the owner’s SSN. However, there are a few exceptions where an LLC with only one member will need to obtain an EIN:
- If the LLC has to file any of the following tax returns:
- Employment Tax Returns
- Excise Tax Returns
- Alcohol, Tobacco, and Firearms Tax Returns
- Pension or annuity returns
- Estate or trust income tax returns
- Partnership Tax Returns (Form 1065)
- Corporation Income Tax Returns (Form 1120, 1120-A, or 1120-S)
- If the LLC has employees
- If the LLC operates under a trade name other than the owner’s legal name
- If the LLC will file quarterly tax returns for estimated taxes
Corporation
All corporations, including Subchapter S Corporations and non-profit organizations, must have an EIN.
Trust / Estate
Trusts and estates, including complex trusts, simple trusts, and estates of decedents who were not residents of the United States at the time of death, with income greater than $600 in a tax year, must have an EIN.
Step 2 of 4: Gather the required information
If you determine that you need an EIN, the next step is to gather the required information. You will need the following:
- The name and address of your business
- The type of business entity
- The names and Social Security Numbers of the owners or partners
Step 3 of 4: Apply for an EIN
There are three ways to apply for an EIN:
Online
The fastest and easiest way to apply for an EIN is through the official IRS website. You will provide the required information, such as your Social Security Number, to apply. The IRS will validate your information and provide you with an EIN when it does not encounter any problems.
By fax
You can fax your completed Form SS-4 to the following:
- If your business address is in the U.S., use this number:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
- If your business address is in the U.S. or you do not have a place of business, use this number:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Fax: (855) 215-1627 (within the U.S.)
Fax: (304) 707-9471 (outside the U.S.)
Fill out Form SS-4, Application for Employer Identification Number
By mail
You can apply for an EIN by mailing your completed Form SS-4 to the following:
- If your business address is in the U.S., use this address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
- If your business address is in the U.S. or you do not have a place of business, use this address:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
You can download Form SS-4 on the official IRS website to complete it by hand. For convenience, you can use an online document editor to fill out Form SS-4 electronically.
Step 4 of 4: Wait for your EIN
The IRS usually will send your EIN within four to five weeks when you apply via mail, within four business days via fax, and immediately when you apply online.
When you receive your EIN, you can start using it for a variety of business activities such as opening a bank account, filing taxes, and applying for business licenses and permits. Protect your EIN and have it accessible.
If you are planning to get an EIN, get started on the application process today.
