What Is an EIN? Employer Identification Number Explained

What Does EIN Stand For?

EIN stands for Employer Identification Number.

The number is issued by the Internal Revenue Service (IRS) and is used to identify an entity for federal tax and reporting purposes.

Although the word “employer” appears in the name, an EIN is not limited to businesses with employees. The IRS assigns EINs to a range of entities, including corporations, partnerships, sole proprietors, estates, trusts, and certain other organizations.

An EIN is different from an individual’s Social Security number (SSN). An SSN identifies an individual, while an EIN generally identifies a business or other entity for federal tax purposes.

What Is an EIN Used For?

An EIN can be used for a variety of federal tax and business purposes.

Depending on the type of entity and its circumstances, an EIN may be used to:

• Identify a business or organization when dealing with the IRS
• File federal tax returns and information returns
• Report employment taxes
• Identify an employer for federal payroll purposes
• Open certain business bank accounts
• Apply for certain business licenses or permits
• Handle certain tax-related transactions
• Identify an estate, trust, partnership, corporation, or other entity
• Provide the business’s federal identification number to financial institutions or other organizations when required

The exact requirements depend on the type of business or organization involved.

For example, an employer that is required to report employment taxes generally needs an EIN. The IRS also uses EINs for certain entities that do not have employees.

Does an EIN Mean You Have Employees?

No.

Having an EIN does not necessarily mean that you have employees.

Some businesses and organizations need an EIN even when they do not currently employ anyone. For example, the IRS states that every organization must have an EIN, even if it will not have employees.

Whether an individual business needs an EIN depends on its legal structure, tax treatment, ownership, and other circumstances.

What Does an EIN Look Like?

An EIN contains nine digits and is normally written in this format:

12-3456789

The IRS describes an EIN as a nine-digit number.

Your EIN is assigned to your entity and should be kept with your important business and tax records.

If you receive an EIN, keep the IRS confirmation notice or other documentation showing the number in a secure location. You may need the number later when filing tax forms, opening accounts, or communicating with government agencies and financial institutions.

Is an EIN the Same as a Federal Tax ID?

In many business contexts, EIN and federal tax identification number (federal tax ID) refer to the same nine-digit IRS-issued identification number.

You may see different terms used, including:

• Employer Identification Number
• EIN
• Federal Employer Identification Number
• FEIN
• Federal Tax Identification Number
• Federal Tax ID

However, terminology can vary by form or organization. When an IRS form specifically asks for an EIN, use the EIN assigned by the IRS.

Who Needs an EIN?

There is no single rule saying that every business owner must obtain an EIN.

The need for an EIN depends on the entity and its circumstances.

Entities that may need or use an EIN include:

• Corporations
• Partnerships
• Limited liability companies (LLCs), depending on their tax classification and circumstances
• Sole proprietors in situations where an EIN is required or useful
• Trusts
• Estates
• Tax-exempt organizations and nonprofits
• Certain other organizations and entities

The IRS Form SS-4 instructions identify employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities among those that may receive EINs.

Do I Need an EIN for an LLC?

Many LLCs need an EIN, but the answer depends on the LLC’s tax classification and circumstances.

For example, an LLC may be treated differently for federal tax purposes depending on its ownership and elections.

A single-member LLC does not automatically have the same federal tax treatment as a multi-member LLC. Because of that, you should determine the LLC’s federal tax classification before assuming that the same EIN rule applies to every LLC.

For a detailed guide, see: EIN for LLC: When an LLC Needs an EIN

Do Sole Proprietors Need an EIN?

Not every sole proprietor is required to have an EIN.

The IRS rules for sole proprietors depend on the individual’s circumstances and the type of tax or reporting obligations involved.

A sole proprietor may also choose to obtain an EIN for certain business purposes even when an EIN is not otherwise required.

Because an EIN requirement can depend on specific facts, sole proprietors should not assume that having no employees automatically means an EIN is unnecessary.

For a detailed explanation, see: EIN for Sole Proprietor

Do You Need an EIN If You Have No Employees?

Not necessarily.

The name “Employer Identification Number” can make it sound as though an EIN is required only when a business hires employees. That is not the case.

The IRS issues EINs to entities that may have no employees, and certain organizations are required to have an EIN regardless of whether they employ workers.

Whether you need one depends on your entity type and circumstances.

What Is the Difference Between an EIN and an SSN?

An EIN identifies a business or other eligible entity, while an SSN identifies an individual.

Here is the basic distinction:

An EIN should not simply be substituted for an SSN, or vice versa, when a form specifically requests one of them.

The IRS specifically cautions taxpayers not to use an SSN in place of an EIN when an EIN is required.

For a more detailed comparison: EIN vs. SSN: What’s the Difference?

Is an EIN the Same as an ITIN?

No.

An ITIN, or Individual Taxpayer Identification Number, is different from an EIN.

An ITIN is an IRS-issued tax processing number for certain individuals who need a U.S. taxpayer identification number but are not eligible for an SSN.

An EIN, by contrast, is generally used to identify a business, organization, or other entity for federal tax purposes.

If you are trying to determine whether you need an EIN or ITIN, look at whether the taxpayer identification number is being requested for you as an individual or for a business or other entity.

See: EIN vs. ITIN: What’s the Difference?

Is an EIN Free?

Yes. The IRS does not charge a fee to issue an EIN.

The IRS provides an online EIN application at no charge for eligible applicants. The IRS specifically warns applicants about websites that charge a fee for obtaining an EIN.

You can therefore apply for an EIN directly through the IRS without paying a third-party service simply to obtain the number.

Third-party services may offer additional business-formation or administrative services for a fee, but the EIN itself is issued by the IRS without an IRS application fee.

For more information: Is an EIN Free?

How Do You Get an EIN?

The IRS provides several application methods depending on the applicant’s circumstances.

1. Online application

Eligible applicants can apply through the IRS online EIN application system.

The IRS says the online tool can issue an EIN immediately online when the application is approved.

The online method is generally available when:

• The organization is domestic and formed or created in the United States or U.S. territories
• The principal place of business is in the United States or U.S. territories
• The applicant is the responsible party or an authorized representative
• The responsible party has an SSN or ITIN when required for the online application

The IRS states that applicants whose principal place of business is outside the United States or U.S. territories cannot use the online application and should apply by phone, fax, or mail instead.

2. Form SS-4

Another way to apply is by completing Form SS-4, Application for Employer Identification Number.

The IRS provides Form SS-4 and its instructions for applicants who need to apply for an EIN.

Form SS-4 asks for information about the entity, including its legal name, address, entity type, reason for applying, and responsible party.

Learn more: Form SS-4: Application for Employer Identification Number

3. International application

If the principal place of business is outside the United States or U.S. territories, different application procedures apply.

The IRS currently states that international applicants can apply by telephone and can also submit Form SS-4 by fax or mail.

Because IRS procedures and contact information can change, international applicants should verify the current instructions directly with the IRS before submitting an application.

See: How to Get an EIN as a Foreign Applicant

What Is a Responsible Party for an EIN?

The responsible party is the individual who ultimately owns or controls the entity or who exercises ultimate effective control over the entity and its funds or assets.

The IRS generally requires the responsible party to be an individual rather than another entity, except for certain government entities.

Examples can vary by entity type.

The IRS identifies the following typical responsible parties:

• Corporation: Principal officer
• Partnership: General partner
• Tax-exempt organization: Principal officer
• Trust: Grantor, owner, or trustor
• Estate: Executor, administrator, personal representative, or other fiduciary

Choosing the correct responsible party is important when completing Form SS-4.

What Is a Nominee?

A nominee is someone who acts on behalf of the true responsible party but does not actually have the required ownership or control.

The IRS states that nominees are not authorized to apply for an EIN and warns that using a nominee can put the entity’s information and privacy at risk.

For more detail: EIN Responsible Party: Who Should Be Listed on Form SS-4?

When Should You Get an EIN?

The right time to obtain an EIN depends on your circumstances.

For many newly created businesses, the appropriate sequence is:

1. Form or legally establish the entity when required.
2. Determine the entity’s federal tax classification.
3. Determine whether an EIN is required.
4. Gather the information needed for the EIN application.
5. Apply through the appropriate IRS method.
6. Keep the EIN confirmation with your permanent business records.

The IRS specifically advises organizations such as nonprofits not to apply for an EIN until the organization is legally formed.

This is one reason it is better to determine the entity’s legal status before submitting an EIN application.

How Long Does It Take to Get an EIN?

For eligible applicants using the IRS online EIN application, the IRS states that an approved EIN can be issued immediately online.

Other application methods can take longer.

Processing time depends on the method used and the circumstances of the application. If timing is important, check the current IRS instructions rather than relying on an old processing estimate.

See: How Long Does It Take to Get an EIN?

Can You Get More Than One EIN?

The IRS limits EIN issuance to one EIN per responsible party per day.

This limitation applies regardless of whether the request is submitted online, by telephone, fax, or mail.

That means you should not submit multiple EIN applications for the same responsible party on the same day simply because you have not yet received a number.

If you are unsure whether an EIN has already been assigned, check your records and follow the IRS procedures for resolving an EIN issue rather than submitting duplicate applications.

What Happens After You Receive an EIN?

Once the IRS assigns an EIN, keep the number and your confirmation documentation with your important business records.

You may need the EIN for future tax filings, banking, payroll, licensing, and other business-related activities.

You should also make sure that the business’s identifying information remains accurate.

For example, the IRS says changes to a responsible party must be reported using Form 8822-B and that responsible-party changes generally must be reported within 60 days.

An EIN is an important business identifier, so avoid losing the original confirmation documentation.

Can an EIN Expire?

An EIN does not work like a temporary permit that automatically expires after a fixed period.

The IRS assigns EINs as permanent federal identification numbers for entities. If circumstances change, the question is generally whether the existing EIN remains appropriate or whether a new EIN is required under the IRS rules for that entity.

For example, the IRS Form SS-4 instructions explain circumstances in which a sole proprietorship that incorporates or enters into a partnership requires a new EIN.

Do not automatically apply for a new EIN just because your business name, address, ownership, or circumstances changed. First determine whether the IRS rules actually require a new number.

See: Do I Need a New EIN?

EIN vs. Business License

An EIN is not the same thing as a business license.

An EIN is a federal identification number issued by the IRS.

A business license or permit is generally an authorization issued by a government authority allowing a business to conduct a particular activity.

Depending on the business, you may need:

• An EIN
• A state or local business registration
• Professional or occupational licenses
• Industry-specific permits
• State tax registrations

Getting an EIN does not automatically create every license or registration your business may need.

EIN vs. State Tax ID

An EIN is a federal identification number issued by the IRS.

A state tax identification number is different and may be issued by a state revenue or taxation agency.

A business can therefore have an EIN while also having one or more state-level tax accounts or registrations.

If a bank, government agency, tax form, or licensing authority asks for an identification number, check whether it wants your federal EIN or a state-issued number.

Common EIN Mistakes to Avoid

Several simple mistakes can create unnecessary problems during the EIN application process.

1. Paying for the EIN itself

The IRS does not charge an application fee for an EIN. Be cautious of websites that make it appear that you must pay to receive the number.

2. Applying before the entity is legally formed

For entities that must be legally created before obtaining an EIN, complete the required formation process first.

3. Listing the wrong responsible party

The responsible party should generally be the individual who ultimately owns or controls the entity, not simply a person hired to submit paperwork.

4. Submitting duplicate applications

The IRS limits EIN issuance to one per responsible party per day.

5. Confusing an EIN with an SSN or ITIN

These taxpayer identification numbers serve different purposes.

6. Failing to keep your EIN confirmation

Keep your EIN documentation in a secure business record system so that you can retrieve the number when it is needed.

Frequently Asked Questions About EINs

Bottom Line: What Is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit federal identification number issued by the IRS.

It is primarily used to identify businesses, organizations, and certain other entities for federal tax and reporting purposes. An EIN may be needed for corporations, partnerships, certain LLCs, sole proprietors, nonprofits, trusts, estates, and other entities depending on their circumstances.

If you are ready to determine whether your business needs an EIN, the next step is to review the specific requirements for your entity type.