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What an EIN Is and Why Businesses Need One

An Employer Identification Number, or EIN, is a nine-digit code that the Internal Revenue Service (IRS) uses to identify business entities for tax purposes. Think of it like a Social Security number, but for your business instead of a person. The format is always XX-XXXXXXX, with a hyphen after the first two digits.

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The IRS assigns EINs to sole proprietorships, partnerships, corporations, nonprofits, trusts, estates, and other business structures. If you run a business that has employees, you must have an EIN. Even if you operate as a sole proprietor without employees, you may still want one to keep your personal and business finances separate.

According to the IRS, there are approximately 33 million active EINs in use across the United States. This number reflects the diversity of American business—from large corporations with thousands of employees to small family-owned operations. Each EIN is unique to a specific business entity and cannot be transferred or reassigned if that business closes.

An EIN serves several practical functions. You'll need it to open a business bank account, hire employees, apply for business loans, file business tax returns, and establish business credit. Some landlords require an EIN before leasing commercial space. Financial institutions use it to report business income and interest on tax forms sent to the IRS.

Understanding that an EIN is a business identifier—not a personal one—is crucial. Your EIN ties directly to your business structure and the business activities you report. The IRS uses this number to match your business tax filings, W-2 forms from employees, and 1099 forms from contractors or clients.

Practical Takeaway: If you're starting a business or already operate one, learn whether your business structure requires an EIN before you move forward with banking, hiring, or tax filing.

Different Business Types and EIN Requirements

Not all businesses need an EIN, though many benefit from having one. The IRS has specific rules about which business structures must obtain an EIN and which ones may be optional. Understanding these rules helps you determine what steps to take with your particular business.

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Sole proprietorships are businesses owned and operated by one person. If you're a sole proprietor with no employees and you don't use a business name different from your legal name, you can use your Social Security number instead of an EIN for tax purposes. However, sole proprietors who hire employees must obtain an EIN, regardless of how many people they hire.

Partnerships must have an EIN. A partnership is a business owned by two or more people who share profits and losses. The IRS requires partnerships to file Form 1065 (U.S. Return of Partnership Income), and this form requires an EIN. The partnership's EIN is distinct from the personal Social Security numbers of the partners.

Corporations—whether C corporations or S corporations—must obtain an EIN. Corporations are separate legal entities from their owners. When you form a corporation, the IRS treats it as a distinct business for tax purposes, so it needs its own identification number.

Limited liability companies (LLCs) have more flexibility. An LLC with a single member who has not chosen to be taxed as a corporation can use the owner's Social Security number. However, an LLC with multiple members must have an EIN because it's taxed as a partnership by default. An LLC that chooses to be taxed as a corporation also must have an EIN.

Nonprofits, trusts, and estates virtually always need an EIN. Religious organizations, charities, and other tax-exempt entities file Form 1023 or Form 1024 with the IRS, and these applications include obtaining an EIN as part of the process. Trusts and estates that generate income or file tax returns also require EINs.

Practical Takeaway: Review your specific business structure to understand whether an EIN is required or optional for your situation before taking action.

How to Request an EIN From the IRS

The IRS offers multiple methods for requesting an EIN, with the fastest option being online through their website. Understanding each method—including processing times, requirements, and what information you'll need—helps you choose the approach that works best for your situation.

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The online method through IRS.gov is the fastest way to receive an EIN. You can obtain one immediately after completing the online form, which takes about 15 minutes. To use this method, you need a valid Taxpayer Identification Number (TIN), which is either a Social Security number or an existing EIN. You also need to be physically located in the United States when you request the EIN online. The IRS provides the online application tool at their website, and the system assigns you a number instantly once your application processes.

Telephone requests are another option. You can call the IRS Business and Specialty Tax Line at 1-800-829-4933. The phone line is available Monday through Friday, 7 a.m. to 10 p.m. Eastern Time. When you call, be prepared to provide information about your business, such as its legal name, physical address, business structure, and reason for needing an EIN. The IRS agent assigns you a number during the call, though you'll receive written confirmation by mail within two weeks.

Mailing a paper Form SS-4 (Application for Employer Identification Number) is a traditional method that takes longer. Processing typically takes two to four weeks. You mail the completed form to the IRS office that serves your state. You can obtain the form from IRS.gov or by calling the IRS. This method works if you don't have internet access or prefer paper-based processes.

Faxing Form SS-4 to the IRS is faster than mailing but slower than online or phone requests. The IRS typically processes fax requests within four business days. You fax the form to the IRS fax number for your state, which is listed on the form itself.

Before requesting an EIN through any method, gather the following information: your Social Security number or existing EIN, your business's legal name exactly as you want it on IRS records, your business's physical address, the mailing address if different from the physical address, the type of business structure, the date you started or plan to start the business, and the reason you're requesting an EIN (such as hiring employees or opening a bank account).

Practical Takeaway: Choose the method—online, phone, mail, or fax—that fits your timeline and comfort level, and gather your business information before you start the process to complete your request efficiently.

What Information You Need Before Requesting an EIN

Preparing the right information before you request an EIN streamlines the process and reduces the chance of errors or delays. Whether you request online, by phone, by mail, or by fax, the IRS asks for the same basic details about your business and its owner or owners.

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Your personal tax identification number is the first piece of information you'll provide. If you're a U.S. citizen or resident alien, this is your nine-digit Social Security number. If you don't have a Social Security number, you may be able to obtain an Individual Taxpayer Identification Number (ITIN) from the IRS. For partnerships or corporations, the IRS asks for the tax identification number of the person who is applying for the EIN on behalf of the business.

Your business's legal name is important because the IRS records it exactly as you provide it. This should match the name on your business registration documents, if any. If you use a "doing business as" name (DBA) that differs from your legal business name, provide both. The IRS maintains the legal name in their records for all official correspondence and tax documents.

The physical address of your business is required. This should be a street address, not a P.O. Box. If your business doesn't have a physical location yet—perhaps you're a consulting business that operates from home—you provide your home address. If you use a virtual office or mailbox service, use the actual street address of that service.

You'll need to specify your business structure. Options include sole proprietorship, partnership, S corporation, C corporation, LLC, nonprofit organization, trust, estate, or other structures. The IRS uses this information to understand how your business is taxed and what forms you'll file in the future.