What is an EIN?
A Federal Employer Identification Number, often called an EIN or business tax ID number is a tax identification number assigned to business entities by the Internal Revenue Service. This is a nine-digit number that is used to identify a business on tax forms and links all related tax activity to your business.
What is an EIN used for?
- Open a bank account – Banks need an EIN (or SSN if the EIN isn’t needed) before opening a business bank account.
- Apply for business licenses & permits – Most business licenses and permits will require the EIN (or SSN) before granting one.
- Filing tax returns – To file state and federal tax returns, the EIN is used to identify the business.
- Hiring employees – The EIN is the account number for the business to track employment taxes like payroll taxes, income tax withholdings, and unemployment.
Is an EIN Needed to Open a Business Bank Account?
Partnerships, corporations, Limited Liability Companies (LLC), and sole-proprietorships with employees need to file for an EIN.
A sole proprietor or single-member LLC without employees can open a business checking account or business credit card with just the owner’s SSN. Note though that some banks either forget this or have rules that say the business has to have an EIN.
How to get an EIN
The easiest and fastest way to apply for an EIN is to visit the IRS site. It takes about 5 minutes to file and you will have a number within seconds. If applying online isn’t an option, you can apply by mail or fax by sending the SS-4 form. You can even get an EIN over the phone. If filing by phone, note that it isn’t a toll-free number.
There is no cost to get an EIN.