How to Get an EIN for Your Business: A Step-by-Step Guide
If you’re starting a business, one of the first things you’ll need is an Employer Identification Number (EIN). Think of it as a Social Security Number for your business. Issued by the Internal Revenue Service (IRS), an EIN is used to identify your business for federal tax purposes. But beyond taxes, this nine-digit number plays a vital role in everyday business operations.
Whether you’re opening a business bank account, applying for licenses, hiring employees, or building business credit, having an EIN is essential. Even if you’re a sole proprietor without employees, obtaining an EIN can help keep your business finances separate from your personal ones, which is crucial for legal and financial clarity.
Applying for an EIN is free, and the process is fairly straightforward. Follow this step-by-step guide to get your EIN and set your business on the path to success.
1. Determine if Your Business Needs an EIN
Check if your business really needs an EIN before applying. You’ll need an EIN if:
You're in a corporation, LLC, or partnership business model.
You have employees.
You are required to file federal employment, excise, or other specific tax returns.
A nonresident alien pays income tax withheld from your business.
You have a Keogh plan or are involved with other tax-deferred pension plans.
In fact, even most sole proprietors opt to get an EIN anyway so that they can keep their business finances distinct from personal ones.
2. Gather Required Information
To apply for an EIN, you’ll need basic information about your business:
Legal Business Name: The exact name of your business as registered with the state.
Business Structure: Corporation, partnership, LLC, sole proprietorship, nonprofit, or other entity type.
Responsible Party’s SSN or ITIN: For sole proprietors, this is typically the owner’s Social Security Number.
Business Address: A physical or mailing address where the business is located.
3. Choose the Application Method
The IRS provides multiple ways to apply for an EIN:
Online: The fastest and most convenient option. The IRS’s online application system generates an EIN immediately upon completion. This option is not available for foreign applicants who do not have a SSN.
By Mail: Fill out Form SS-4 (Application for Employer Identification Number) and mail it to the IRS. Processing takes about four weeks.
By Fax: Complete and fax Form SS-4 to the IRS for quicker processing, usually within a few business days.
By Phone: For international applicants, the IRS allows EIN applications via phone.
4. Complete the EIN Application
When completing the EIN application, follow these steps:
Identify Your Entity Type: Indicate your business structure and provide required details, such as the date of formation.
Provide Business Information: Enter the business name, address, and other identifying information.
Select a Responsible Party: Name the individual who controls, owns, or manages the business. This is often the business owner or a principal officer. Selecting the responsible party is an important decision, as this person will represent your company in your dealings with the IRS.
Describe the Business Activity: Describe your business’s main activities or purpose, as requested by the IRS.
5. Submit and Receive Your EIN
Online Applications: Receive your EIN instantly. Save or print the confirmation page for your records.
Fax or Mail Applications: After submission, the IRS will send your EIN by mail within a few weeks (or by fax, if applicable).
6. Record and Safeguard Your EIN
Once you have your EIN, keep it safe. You’ll need it for tax filings, banking, payroll, and government applications. Keep a digital and physical copy in a secure location to prevent loss or misuse.
7. Notify Relevant Agencies and Financial Institutions
After receiving your EIN, use it when opening a business bank account, applying for licenses, or registering with state tax agencies. This ensures that all business-related financial and legal documentation uses the correct identifier.
Benefits of Having an EIN
An EIN helps establish your business’s credibility and supports business growth by:
Building Business Credit: An EIN allows your business to build credit separate from personal finances.
Enabling Tax Compliance: Using an EIN helps streamline tax filings and payroll processes.
Supporting Business Expansion: An EIN is often required when applying for business loans or seeking investors.
Obtaining an EIN is an essential step that benefits both new and growing businesses. By following these steps, you can secure an EIN quickly and easily, setting a strong foundation for business operations and financial management.
