EIN Number: How to Get an Employer Identification Number

Introduction

An Employer Identification Number (EIN) is one of the most fundamental requirements for operating a business in the United States. This comprehensive guide covers everything you need to know about obtaining and using an EIN number for your business operations.

Whether you’re launching a new startup, forming an LLC, incorporating a business, or hiring your first employee, understanding EIN requirements is crucial for maintaining tax compliance and establishing your business identity with federal and state agencies.

Your EIN serves as your business’s social security number, enabling you to open business bank accounts, apply for business licenses, file tax returns, and conduct official business transactions. Without proper EIN management, you risk delayed business operations, compliance issues, and missed opportunities for business growth.

Tax Basics

How EIN Numbers Work

An EIN is a unique nine-digit federal tax identification number assigned by the Internal Revenue Service (IRS) to identify your business entity for tax purposes. The number follows the format XX-XXXXXXX and remains with your business throughout its entire lifecycle.

The IRS uses your EIN to track business tax filings, employment tax deposits, and other business-related tax obligations. Once assigned, your EIN becomes permanently associated with your business entity and cannot be transferred to another business or reused.

Who Is Affected

Multiple types of business entities and situations require EIN numbers:

Required to obtain an EIN:

• Businesses with employees
• LLCs (in most cases)
• Corporations and S-corporations
• Partnerships
• Non-profit organizations
• Sole proprietors who want to separate business and personal finances

May need an EIN:

• Sole proprietors without employees (can use SSN instead)
• Single-member LLCs electing sole proprietorship tax treatment
• Businesses opening dedicated business bank accounts

Key Terminology

Responsible Party: The individual who controls, manages, or directs the entity and the disposition of its funds and assets. This person’s SSN or ITIN is required on the EIN application.

Tax Year: The annual accounting period for keeping records and reporting income and expenses.

Business Structure: The legal form of your business (sole proprietorship, partnership, LLC, corporation, etc.) which determines tax obligations and EIN requirements.

Requirements and Obligations

What You Must Do

Obtaining an EIN involves several mandatory steps and ongoing obligations:

Application Process:
1. Determine your business structure and legal name
2. Identify the responsible party
3. Complete Form SS-4 or apply online through the IRS website
4. Provide accurate business information and formation details
5. Specify your business activities and expected number of employees

Timing Requirements:

• Apply for your EIN before conducting business operations
• Obtain EIN before hiring employees
• Get your EIN before opening business bank accounts
• Apply within 30 days of forming certain business entities

Filing Requirements

Once you receive your EIN, several filing obligations may apply:

Employment Tax Returns:

• Form 941 (Quarterly Federal Tax Return) for businesses with employees
• Form 940 (Annual Federal Unemployment Tax Return)
• State employment tax returns as required by your jurisdiction

Annual Information Returns:

• Form 1065 for partnerships
• Form 1120 for C-corporations
• Form 1120S for S-corporations
• Various information returns for other entity types

Payment Schedules

EIN-related tax obligations follow specific payment schedules:

Employment Taxes:

• Quarterly payments for Form 941 liabilities
• Monthly or bi-weekly deposits for larger employers
• Annual payments for Federal Unemployment Tax (FUTA)

Estimated Taxes:

• Quarterly estimated tax payments for business income
• Coordinated timing with personal tax obligations for pass-through entities

Strategies and Planning

Ways to Optimize EIN Management

Business Structure Planning:
Choose your business structure carefully before applying for an EIN, as changing structures later may require a new EIN and create administrative complications.

Banking Separation:
Use your EIN to establish clear separation between business and personal finances, even if not legally required. This separation provides liability protection and simplifies tax preparation.

Credit Building:
Establish business credit using your EIN to build creditworthiness separate from personal credit profiles.

Common Strategies

Multi-Entity Planning:
Businesses with multiple entities or subsidiaries need separate EINs for each legal entity, enabling proper tax reporting and liability separation.

Succession Planning:
Maintain accurate EIN records and responsible party information to facilitate business transfers, sales, or succession planning.

State Registration Coordination:
Coordinate federal EIN applications with state business registration requirements to streamline the formation process.

Timing Considerations

Formation Timing:
Apply for your EIN immediately after forming your business entity but before beginning operations or hiring employees.

Banking Timing:
Obtain your EIN before attempting to open business bank accounts, as financial institutions require this information for account setup.

License Timing:
Many business licenses and permits require EIN information, so obtain your number early in the formation process.

Common Mistakes

Errors to Avoid

Application Errors:

• Providing incorrect business structure information
• Using wrong responsible party details
• Submitting incomplete or inaccurate business addresses
• Failing to specify the correct business start date

Usage Mistakes:

• Using someone else’s EIN for your business
• Attempting to transfer an EIN between different businesses
• Using a cancelled or inactive EIN for new business activities

Misconceptions

EIN Permanency:
Many business owners incorrectly believe they can change or update their EIN. Once assigned, an EIN remains permanent for that specific business entity.

Multiple EIN Requirements:
Some entrepreneurs mistakenly apply for multiple EINs for the same business entity, creating unnecessary complications and potential compliance issues.

State vs. Federal:
Business owners sometimes confuse state tax ID numbers with federal EINs, leading to incomplete business registration.

Red Flags

Third-Party Scams:
Avoid companies charging excessive fees for EIN applications, as the IRS provides this service free of charge through official channels.

Expedited Processing Claims:
Be wary of services promising immediate EIN approval, as legitimate processing times vary based on application method and IRS workload.

Record Keeping

What to Track

EIN Documentation:

• Original EIN confirmation letter from the IRS
• Form SS-4 application copies
• Any correspondence with the IRS regarding your EIN

Business Formation Records:

• Articles of incorporation or organization
• Operating agreements or bylaws
• State registration confirmations

Documentation Needed

Ongoing Records:

• All tax returns filed using your EIN
• Employment tax deposits and confirmations
• Business license applications and renewals
• Banking and financial account documentation

Supporting Documentation:

• Responsible party identification records
• Business address change notifications
• Employee records and payroll documentation

Organization Tips

Digital Storage:
Maintain electronic copies of all EIN-related documents with secure backup systems and organized file structures.

Access Management:
Ensure multiple authorized individuals can access EIN records and documentation during emergencies or personnel changes.

Regular Updates:
Review and update EIN-related information annually, including responsible party details and business address information.

Getting Professional Help

When to Hire Help

Consider professional assistance for EIN-related matters when:

Complex Business Structures:
Multi-member LLCs, partnerships, or corporations often benefit from professional guidance during the EIN application process.

Multi-State Operations:
Businesses operating across state lines need help coordinating federal EIN requirements with various state tax obligations.

Tax Compliance Issues:
Businesses with employment tax obligations or complex tax situations should work with professionals to ensure proper EIN usage and compliance.

Types of Professionals

Business Formation Services:
Companies like TrustedLegal.com provide comprehensive business formation services, including EIN applications as part of entity formation packages.

Tax Professionals:
CPAs and enrolled agents help with ongoing EIN-related tax obligations and compliance requirements.

Business Attorneys:
Legal professionals assist with business structure planning and EIN requirements for complex business arrangements.

What to Look For

Experience and Credentials:
Choose professionals with demonstrated experience in business formation and tax compliance.

Comprehensive Services:
Look for providers offering complete business formation packages, including EIN applications, state registrations, and ongoing support.

Transparent Pricing:
Select professionals with clear, upfront pricing and no hidden fees for EIN-related services.

FAQ

Q: How long does it take to get an EIN?
A: Online applications typically receive immediate confirmation, while mail and fax applications can take 4-5 weeks for processing. International applicants may experience longer processing times.

Q: Can I use my Social Security Number instead of an EIN?
A: Sole proprietors without employees can use their SSN, but obtaining an EIN provides better privacy protection and enables business banking separation.

Q: What happens if I lose my EIN confirmation letter?
A: You can request a replacement confirmation letter by calling the IRS Business & Specialty Tax Line or submitting a written request with proper business identification.

Q: Do I need a new EIN if I change my business structure?
A: Most business structure changes require a new EIN. For example, converting from sole proprietorship to LLC or from LLC to corporation typically requires a new EIN.

Q: Can I cancel an EIN if I no longer need it?
A: The IRS doesn’t cancel EINs, but you can notify them when you close your business. The EIN becomes inactive but remains permanently associated with your business entity.

Conclusion

Understanding EIN requirements is essential for proper business formation and ongoing tax compliance. From initial application through ongoing usage, your EIN serves as a critical identifier for all business tax obligations and official transactions.

Proper EIN management involves timely application, accurate record keeping, and ongoing compliance with federal and state requirements. Whether you’re forming a simple single-member LLC or a complex multi-state corporation, getting your EIN right from the start sets the foundation for successful business operations.

Ready to start your business journey? TrustedLegal.com has helped thousands of entrepreneurs form LLCs, corporations, and nonprofits with expert guidance and support. Our comprehensive business formation services include EIN applications, state registrations, and ongoing compliance support—all at affordable prices with fast turnaround times. Let our experienced team help you navigate the business formation process and establish your company with confidence.

—

Disclaimer: This article provides general information about EIN requirements and should not be considered legal or tax advice. Business owners should consult with qualified tax professionals or attorneys for guidance specific to their individual circumstances and business needs.