Written by: Carolyn Young
Carolyn Young has over 25 years of experience in business in various roles, including bank management, marketing management, and business education.
Reviewed by: Sarah Ruddle
For over 15 years, Sarah Ruddle has been a noteworthy leader in the business and nonprofit world.
Updated on July 18, 2024
The Internal Revenue Service (IRS) uses your business’ employer identification number (EIN) to identify your company, much the way a Social Security number is used to identify individuals. An EIN is used for tax filing purposes, and when you form an LLC, you’ll probably need to obtain an EIN.
An EIN is used to identify your company and contains information about the state where you do business. The IRS uses it to determine your company as a taxpayer. An EIN is also used to track your business credit and is usually necessary to open a business bank account.
Any business, regardless of entity type, can get an EIN, even a sole proprietorship. However, a sole proprietorship does not have to obtain an EIN if the business has no employees. The sole proprietor can use their Social Security number for tax filing purposes.
If you have a limited liability company (LLC) that has more than one member or if you are going to hire employees, you’ll need to have an EIN. But these aren’t the only factors. The IRS offers a test to determine if you need an EIN:
If you answer yes to any of those questions, you need an EIN.
You do not need an EIN if you have a sole proprietorship with no employees or an LLC with only one member and no employees.
There are several reasons to get an EIN, even if you’re not required to have one. First of all, it adds a degree of separation between your business and personal finances. Besides, it’s usually needed to open a business bank account.
Also, it will allow you to establish business credit, which can help you access future financing. Finally, if you’re not hiring employees now but may do so, you’ll already have your EIN and be ready to go.
According to the IRS:
All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the ‘responsible party,’ controls, manages, or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.
When you fill out the application, you’ll need the following:
The application is Form SS-4, and you can submit it via the IRS website. You can print the form or mail it. If you apply online, your EIN will be issued immediately.
To learn what you need to do to get an EIN in your state, pick your state from the list below. You’ll get all the important details and resources required to obtain an EIN for your business registered in that state.
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