Learn About Getting Your Tax ID Number

What Is a Tax ID Number and Why You Need One

A Tax ID Number, also called an Employer Identification Number (EIN) or Federal Employer Identification Number, is a nine-digit code that the Internal Revenue Service (IRS) uses to identify your business for tax purposes. Think of it like a Social Security Number, but for your business instead of for you as an individual. The format looks like this: XX-XXXXXXX, with two digits, a hyphen, and then seven more digits.

Understanding Health Insurance Coverage Options →

If you operate any kind of business—whether you sell products, offer services, or run a nonprofit organization—you may need an EIN. The IRS assigns these numbers to track business income, employment taxes, and other tax-related matters. According to IRS data, millions of businesses and organizations use EINs each year to maintain their tax records and comply with federal regulations.

Your Tax ID Number serves several important functions. It appears on your business tax returns, which you file with the IRS each year. Banks and financial institutions ask for your EIN when you open a business bank account. If you hire employees, you must use your EIN to report their wages and withhold taxes from their paychecks. Vendors and clients may also request your EIN for their own record-keeping purposes.

You need to know whether your specific situation requires an EIN. Self-employed individuals working as sole proprietors without employees sometimes can use their Social Security Number for tax purposes instead. However, anyone operating as a partnership, corporation, LLC, or S-corp typically needs an EIN. Nonprofits, trusts, and estates also generally need one. Farmers, seasonal workers, and anyone with employees definitely need a Tax ID Number.

Practical Takeaway: Before you start your business journey, understand that a Tax ID Number is a standard business identifier that the IRS uses to track your tax obligations. Knowing whether your business structure requires one is the first step toward proper tax compliance.

Different Types of Tax IDs and How They Apply to Your Situation

The term "Tax ID" can refer to several different numbers depending on your business structure and situation. Understanding which type applies to you matters because it affects how you file taxes and report business information to the government.

Learn How Credit One Online Payments Work →

An Employer Identification Number (EIN) is the most common form of Tax ID for businesses. The IRS issues EINs to all business entities except sole proprietors without employees. If you have formed a corporation, LLC, partnership, or S-corp, the IRS requires you to obtain an EIN. According to IRS statistics, over 33 million EINs were in use as of recent years. The EIN is always nine digits long and never changes once assigned to your business.

Some individuals use their Social Security Number (SSN) as their Tax ID if they operate as a sole proprietor without any employees. This is a common arrangement for freelancers, consultants, and independent contractors who work alone. However, many solo entrepreneurs choose to obtain an EIN anyway for privacy reasons and to keep their business and personal finances more clearly separated. Using an SSN versus an EIN is a decision you should make based on your specific circumstances.

Taxpayer Identification Numbers (TINs) is actually an umbrella term that includes both SSNs and EINs. For the purposes of filing taxes and conducting business, the IRS considers both as valid TINs. However, when someone refers to a "Tax ID" in a business context, they typically mean an EIN.

Other specialized tax identification situations exist for specific circumstances. Nonresident aliens may need an Individual Taxpayer Identification Number (ITIN). Trusts and estates may need an EIN. Nonprofits always need an EIN. Understanding your business structure determines which type of identifier you need and how to obtain it.

Practical Takeaway: Match your business structure to the correct Tax ID type. Most business entities need an EIN, sole proprietors without employees can use their SSN, and other situations have specific requirements. Knowing this distinction helps you move forward correctly.

Who Needs a Tax ID Number and When to Get One

The IRS has specific rules about who must obtain a Tax ID Number. If you fit into any of the following categories, you should plan to get one. This information helps you understand your obligations and avoid potential compliance issues.

Learn About Merrick Bank Credit Card Options →

Business owners operating as corporations must have a Tax ID Number. This includes C-corporations, S-corporations, and close corporations. The corporate structure itself requires an EIN from the moment you form the business. The same applies to Limited Liability Companies (LLCs), regardless of how many owners the LLC has.

Partnerships of any kind need a Tax ID Number. This includes general partnerships, limited partnerships, and limited liability partnerships. The IRS requires the partnership to identify itself with an EIN on all tax filings and business documents. If you are starting a partnership with one or more other people, obtaining an EIN is necessary before you file your first tax return.

Employers with even one employee must have a Tax ID Number. Federal law requires that employers file tax forms and withhold income taxes, Social Security taxes, and Medicare taxes from employee paychecks. The EIN connects all of these payroll records together in the IRS system. If you plan to hire anyone—full-time, part-time, or temporary—you need to obtain an EIN before that person's first day of work.

Nonprofit organizations and tax-exempt entities need a Tax ID Number to maintain their tax-exempt status and file the required annual informational returns. The EIN becomes part of your nonprofit's permanent identity and is used on all public filings. Nonprofits typically obtain their EIN as part of the process of incorporating and applying for tax-exempt status.

Sole proprietors without employees have a choice. You can use your Social Security Number, or you can obtain an EIN if you prefer to keep your business and personal finances more separate. Many solo business owners choose to get an EIN for banking, vendor relationships, and privacy purposes, even though they are not required to do so.

Farmers and agricultural businesses should obtain a Tax ID Number. Even small farming operations benefit from having a separate business identifier for their records and taxes. Seasonal businesses and temporary operations may also find it helpful to have an EIN.

The timing of when to get your Tax ID Number matters. You should obtain it before you open a business bank account, hire your first employee, or file your first business tax return. Many business owners get their EIN as part of their business formation process, at the same time they incorporate or register their business name.

Practical Takeaway: Review your business structure and employee status to determine if you need a Tax ID Number. Most business entities need one, and you should obtain it before you begin major business activities like hiring or opening a business bank account.

How to Obtain Your Tax ID Number

The process of obtaining a Tax ID Number is straightforward and available through multiple methods. The IRS provides several ways to request an EIN, and most methods are free of charge. You do not need to work with any third-party service or pay a fee to the IRS.

Learn About Contractor Tax Deductions and Responsibilities →

The fastest way to obtain a Tax ID Number is through the IRS website using their online EIN application tool. When you use the online system, you can receive your EIN immediately after you complete the application. The IRS online tool at irs.gov allows you to apply 24 hours a day, seven days a week. You provide your business information, answer questions about your business structure and activities, and receive your nine-digit number right away. The online process typically takes 10 to 15 minutes. You will need to have certain information ready, such as your business name, business address, and personal Social Security Number.

You can also apply for a Tax ID Number by telephone. The IRS operates a toll-free telephone line where trained representatives can take your EIN application over the phone. Call 1-800-829-4933 during business hours to speak with an IRS representative. They will ask you questions about your business and issue you an EIN during the call. This method works well if you prefer to speak with someone or have questions about the application process. Telephone applications typically take 15 to 20 minutes.

Paper applications are another option, though they take longer to process. You can download Form SS-4 from the IRS website, fill it out by hand or print it on your computer, and mail it to the IRS address listed on the form. Paper applications usually