A federal Employer Identification Number, nicknamed an EIN or FEIN, is the unique nine-digit taxpayer-identification number that helps the IRS identify your business. Think of it as your company’s social security number: you use this number when you file and pay your business taxes.
In your quest to get an EIN, you may also come across terms like FTIN (federal tax identification number), but don’t let them confuse you. Social security numbers and EINs are the FTINs for individuals and business entities, respectively.
Who needs an EIN?
You’re required to have an EIN if any of the following are true:
- Your business has employees other than you.
- Your business is a corporation (like a C corporation or a S corporation) or partnership (both general and limited partnerships). Even a single-member LLC is required to obtain an EIN if it’s going to hire employees.
- Your business offers a Keogh pension plan.
- Your business withholds taxes on income, other than wages, paid to a non-resident alien.
- Your business is involved with the administration of any of the following: Trusts (except certain grantor-owned revocable trusts, IRAs, and exempt organization businesses), income tax returns, estates, real estate mortgage investment conduits, non-profit organizations, farmers’ cooperatives, or plan administrators.
In other words, many folks who are starting up their business need to get an EIN.
The only kind of business that isn’t required to have one is one that’s structured as a sole proprietorship with no employees. Typically, sole proprietors are people like independent consultants and freelancers, but they could include a wide range of one-man shows.
But even some sole proprietors get EINs in order to keep their personal social security numbers private (especially when they work with many different clients). Check out our article on business structures to learn a little more about the ways you can organize things.
Having an EIN also helps make other things on your to-do list much easier. Want to open a bank account in the name of your business? Or issue 1099 forms to independent contractors you use? Then you’ll probably need an EIN.
If you’re at all unsure about whether you need an EIN, your accountant can probably give you the yay or nay in about two seconds flat.
How to register for an EIN
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Getting an EIN is something you can handle yourself. It’s free and easy to get an employer ID number.
Here are the three quick ways to do it yourself:
Apply online. This is how most people are going to get their EIN.
- If you’re not 100% sure you need an EIN, use this IRS test. If you click on the YES option for any one of the questions, you’ll be taken through an EIN signup flow.
- If you know you need an EIN, go straight to the application page.
Apply by mail or fax. If snail mail is the route you choose, download IRS Form SS-4: Application for Employer Identification Number. Fill it out and either fax or mail it in to get your EIN within four weeks.
Apply by phone. If you’re international, you’ll most likely have to register via phone. (US-based applicants cannot use this method.) Dial the IRS Business and Specialty Tax Line at 800-829-4933, answer a few questions, and you get your EIN right then and there (but you won’t receive your official EIN confirmation notice until later).
Check out the IRS instructions for completing the process here.
When will I get my EIN?
Typically, you will receive your EIN immediately when you apply online or by phone. A faxed application will take about one week to process, and mailed-in applications may take up to four or five weeks.
Once you receive the paperwork, make sure to keep it in a safe place. It will be essential to reference your legal name, EIN, and withholding tax deposit schedule. Additionally, you’ll need this number when filing and payroll federal payroll and business income taxes, as well as when you register as an employer with most state and local taxing authorities. This number is often required when filing and paying your state and local taxes.