- Employer Identification Numbers — commonly referred to as EINs or EIN numbers — are unique identification numbers for businesses and serve a similar purpose as personal Social Security numbers.
- EINs are issued through the federal government to business entities.
- Most businesses are required to have an EIN, including corporations, partnerships and limited liability companies.
As small business owners are filling out forms, they often see requests for an employer identification number, which is generally referred to as an EIN or EIN number.
But what is an EIN? It’s a unique identification number for a business, which functions similarly to a personal Social Security number (SSN) as a form of identification. While EINs have other applications, they are generally used for business tax purposes.
It’s very important for most business owners to have EINs, so it’s essential to know what an EIN is, what they're used for, the types of businesses that need one and how to get one
What is an employer identification number (EIN)?
An EIN is a unique nine-digit number that identifies the company as a business operating in the United States. It's assigned by the U.S. Internal Revenue Service (IRS). It's similar to a personal SSN in the sense that an EIN is uniquely assigned to a single party. Occasionally, you may hear this referred to as a business EIN number, a federal employer identification number (FEIN) or a federal identification number.
What is an EIN used for?
An EIN is used as a reporting method for the IRS. You’ll need it to file your business taxes. Other instances when business owners may use an EIN include opening a business bank account, applying for a business loan or applying for business licenses.
The IRS requires certain business entities, such as corporations, partnerships and limited liability companies (LLCs) to use EINs. Sole proprietors and self-employed individuals have the option to use their SSNs instead of an EIN but may choose to use an EIN if they’d like.
When establishing a bank account as a business entity (corporation, sole prop with employees, LLC, LLP, non-profit corporation, etc.), the entity will need to provide both the EIN and preferably the IRS SS-4 form reflecting the EIN. This will help ensure that the tax reporting at year-end is accurate.
For non-profit organizations, many are incorporated. As such, to open a bank account for the non-profit, the client will be required to provide the IRS determination letter, which reflects both the EIN and tax-exempt status of the organization (i.e., 501c3, 501c4, etc.).
What types of businesses need an EIN?
Businesses that meet the following conditions will require an EIN, according to the IRS:
- The company has employees
- The company operates as a corporation, partnership or limited liability company
- The company files any of the following tax returns: employment, excise, alcohol, tobacco or firearms
- The company withholds taxes on income paid to non-resident aliens
- The company has a Keogh plan
- The company is involved with certain types of organizations, including but not limited to: trusts, estates, nonprofits, farmers' cooperatives and plan administrators
Business entities that require an EIN include:
- Limited liability companies (LLCs)
- Single-member LLCs
- Multi-member LLCs
- Nonprofit organizations
- Sole proprietorships with employees
Additionally, some trust agreements may require an EIN. Though most trust agreements are commonly reported under the SSN of one of the trustees, some individuals and families with a trust may opt to have a separate EIN altogether. Estate accounts (generally established after an individual’s passing for the distribution of assets) will also require an EIN, separate and apart from the decedent’s SSN.
EIN vs. UEI
EIN and UEI numbers may appear similar, as they're both government-issued numbers that uniquely identify a business. However, they have key differences.
An EIN is primarily issued by the Internal Revenue Service (IRS), while a Unique Entity Identifier is issued by SAM.gov.
Generally, EINs are used for business tax purposes, whereas UEIs are required for organizations doing business with the federal government. Not all businesses require a UEI number; however, if your company plans to pursue contracts with the federal government or receive federal grants, you will need a UEI, separate from your EIN.
How to apply for an EIN
Businesses can apply for EINs in one of four ways: by phone, fax, mail or online through the IRS website at IRS.gov. The IRS recommends applying online since once your information is validated, the number is issued immediately.
Regardless of the method you choose, it's free to obtain an EIN. To complete an EIN application, you will specifically need to fill out IRS Form SS-4. This form will request the following information:
- The business name
- The name of the company’s principal officer, trustor, owner or related title and their personal taxpayer identification number
- The type of business entity
- The reason for the EIN application (such as a change in business structure or establishing a new business)
|EIN Application Responsibility: Understanding the Responsible Party|
|The “responsible party” is the sole person who is authorized to submit the EIN application itself (including the completed IRS Form SS-4), as well as handle all IRS correspondence. This person may be the owner or controller of the business entity.|
Here are some common questions about EINs that you may encounter as a business owner, both before you have applied for an EIN and once the IRS has issued one.
Is an EIN the same as a tax ID number?
An EIN is a type of federal tax ID number (TIN), but a tax ID can encompass other types of ID numbers too.
How long does it take to get an EIN?
If applying online, you can instantly receive an EIN once your information has been validated by the IRS. You can also receive your EIN the same day if you apply by phone.
For application by fax, you can generally expect to receive your EIN in four days. The timeline extends to four weeks for applications by mail.
What happens if I lose my EIN?
If you forget or lose your EIN, you can recover it by contacting the IRS Business and Specialty Tax Line at (800) 829-4933. They're available from 7 a.m. to 7 p.m. your local time (Pacific time for Alaska and Hawaii), Monday through Friday. To recover the EIN, you will need to provide your identifying information. You'll receive your number again over the phone.
You also may be able to locate your EIN on a confirmation email from the IRS or previously filed forms, such as taxes or applications.