What Is an EIN and How to Apply for One?
When starting a business in the United States, understanding how to comply with tax laws is critical. One of the first steps is knowing what an EIN is and how to apply for one. An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to identify a business entity for tax purposes.
Whether you’re forming an LLC, hiring employees, or opening a business bank account, you’ll likely need an EIN. It’s sometimes referred to as a Federal Tax ID and acts like a Social Security Number for your business.
Why an EIN Matters and How to Apply for One
Obtaining an EIN is a foundational step in running a legally compliant business. This unique identifier strengthens your company’s credibility, ensures proper tax reporting, and clearly separates your business from your personal identity.
Legal & Tax Compliance
Businesses must use an EIN when filing both federal and state tax returns. It’s also needed to obtain permits, apply for licenses, or maintain your corporation or LLC. Beyond that, this number helps clearly distinguish your business as a separate legal entity.
Hiring Employees
Wage reporting to the IRS requires an EIN for all employers. In addition, it’s necessary when setting up payroll tax accounts. Many states also mandate EIN registration when enrolling with local labor departments.
Financial Benefits
To open a business checking account, financial institutions typically request an EIN. This number is also essential when applying for business loans or credit cards. Over time, it contributes to building your company’s financial profile and credit history.
Who Needs an EIN and When to Apply
Not all businesses are required to get an EIN, but most benefit from having one.
| Business Type or Activity | EIN Required? |
|---|---|
| Hiring employees | ✅ Yes |
| Operating as an LLC, Corporation, or Partnership | ✅ Yes |
| Filing excise or employment taxes | ✅ Yes |
| Nonprofits or trusts | ✅ Yes |
| Sole proprietorship with no employees | ❌ Optional |
If you plan to hire employees, open a business bank account, or apply for licenses, getting an EIN early is a smart move.
When Should You Apply?
It’s best to apply as soon as your business is legally formed. Don’t wait until you hire staff or file your first tax return — taking care of your EIN early keeps your business timeline clean and compliant.
How to Apply for an EIN: Step-by-Step
Step 1: Confirm Eligibility
To be eligible, you must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Your business must also be located in the U.S. or U.S. territories.
Step 2: Choose a Filing Method
There are four official ways to apply:
| Method | Processing Time | Details |
|---|---|---|
| Online | Immediate | IRS EIN Portal |
| Fax | 4 business days | Submit Form SS-4 via fax |
| Up to 4 weeks | Mail Form SS-4 to IRS | |
| Phone (International only) | Immediate | For U.S. citizens abroad |
The fastest and most common method is online filing.
Step 3: Complete Form SS-4
This single-page application asks for:
- Business name and legal structure
- Business address
- Responsible party’s information
- Reason for applying
- Number of employees expected
The form can be submitted digitally or on paper.
Step 4: Submit and Receive Your EIN
Submitting online gives you an EIN instantly, along with a PDF confirmation. If you apply by fax or mail, the response will be returned via the same method.
Be sure to save your confirmation notice. This number will be used for tax filing, banking, and many future legal steps.
Step 5: Use Your EIN
Once assigned, your EIN activates a range of functions. You can file taxes, register with state tax departments, and apply for necessary business permits. Opening a business bank account also requires this number, as does applying for credit or loans.
Having an EIN helps build financial credibility and keeps your business legally compliant from the start.
Can an EIN Be Changed or Canceled?
This number remains with your business permanently. It cannot be reused or reassigned. If you close your company, you can request that the IRS close the EIN account.
In the event your business structure changes — such as moving from a sole proprietorship to a corporation — you may need to apply for a new one. Visit the IRS EIN FAQs for full details.
Frequently Asked Questions
Is applying for an EIN free?
Absolutely. The IRS provides EINs at no cost — don’t fall for paid services that charge unnecessary fees.
Should self-employed individuals get an EIN?
While it’s not mandatory, getting one offers real advantages. You’ll protect your SSN, separate finances, and qualify for business banking.
Is an EIN the same as a TIN?
In short, it is. An EIN is simply a type of Tax Identification Number issued to businesses.
❓ Can non-U.S. citizens apply?
They can. As long as you have an ITIN and a U.S.-based business, the IRS allows you to apply.
Final Thoughts on What Is an EIN and How to Apply for One
Knowing what an EIN is and how to apply for one is a simple yet important legal step in setting up your business. From tax reporting and employee management to banking and credit, this number plays a critical role.
The application process is fast, free, and straightforward. Secure your EIN early so you can focus on launching and growing your business the right way.
