How to get an EIN is simpler than most people expect, because the IRS issues it for free through its online application.
What this tax number is and who needs one
An employer identification number, or EIN, is a nine-digit number the IRS assigns to identify a business for tax purposes. Think of it as a Social Security number for your business. Many businesses need one to handle taxes, and it also comes up when you open a business bank account or apply for a loan.
The IRS lists several situations that call for an EIN, including hiring employees, operating as a corporation or partnership, paying certain excise taxes and changing your business structure or ownership. Some sole proprietors without employees may not need one, but many still get one to avoid giving out their personal number. This is general information, not tax advice, so check with a CPA about your situation.
What you need before you apply
Gather a few things first so the application goes smoothly:
- Your business structure, such as sole proprietorship, LLC, partnership or corporation
- The legal name and address of the business
- The name and tax ID number of the responsible party, usually an SSN or ITIN
- The date and state where the business was formed, if it has been formed
- The reason you are applying, such as starting a business or hiring employees
How to get an EIN, step by step
The IRS online tool is the fastest route for most U.S. based businesses. Here is the order I would follow:
- Form your LLC or corporation with your state first, if that applies to you, so the names match
- Go to the IRS page on getting an EIN and start the online application
- Answer each question about your entity type and responsible party
- Review everything, because you cannot save the application and come back later
- Submit it and print or save the confirmation letter the IRS shows you
- Store the number and the letter with your other business records
How to get an EIN without paying a fee
The IRS service is free. Its page says you never have to pay a fee for an EIN. Some websites charge for what is the same form, and a few look official. If a site asks for money to get you an EIN, close it and go straight to the IRS. If you cannot use the online tool, for example because your business is outside the United States, the IRS describes phone, fax and mail options on the same page.
EIN or SSN: which should a sole proprietor use?
Many sole proprietors without employees can file taxes using their own Social Security number, so an EIN is not always required. Even so, a lot of owners get one. Clients, banks and online platforms often ask for a taxpayer ID, and giving out an EIN keeps your personal number off forms you hand to other people.
The choice depends on your structure and your plans. If you expect to hire, form an LLC or open a business account soon, getting the number now saves a step later. Your CPA can tell you what fits your situation.
Mistakes that delay or complicate your application
Most problems are small and avoidable:
- Applying before the LLC or corporation exists, which can cause mismatched records
- Choosing the wrong entity type and having to correct it later
- Letting the online session expire partway through
- Losing the confirmation letter and not recording the number
- Paying a third party for something the IRS provides for free
What if you lose your number?
It happens. Look first at the IRS confirmation letter you saved, at old tax returns, at your business bank account paperwork and at any loan applications. The IRS also explains on its site how to get a replacement confirmation if you cannot find any of those. Keeping a copy in a secure folder from day one avoids the whole problem.
What to do after you get your number
Once you have the number, open a business bank account, set up your bookkeeping and note any state registrations you need. Our guide on opening a business bank account is the natural next step, and our guide on LLC vs sole proprietorship helps if you are still choosing a structure. If you plan to buy an existing business, remember that the buyer usually needs a new EIN for a new entity, so ask your CPA how your deal is set up.
Related reading on how to get an EIN
- LLC vs. Sole Proprietorship: Setting Up Your Business Opportunity Correctly
- Business Insurance Basics for New Owners: What Coverage You Need
- How to Finance a Business Opportunity: SBA Loans & More
- IRS: get an employer identification number
- Employer Identification Number on Wikipedia
- IRS self-employed individuals tax center
- SBA guide to launching your business
