How to Get a Federal Employer Identification Number (EIN)


When planning to start a business, there are a few documents you’ll need to have. Depending on the type of your business, one of those documents may include a Federal Employer Identification Number, also known as an EIN.


Some businesses choose to apply for a Federal Employer Identification Number right away even if they don’t plan to hire employees in the near future. Having an EIN could be helpful to have as soon as you start your business in various situations. Read on to learn more about when and why you may need an EIN and how to apply for one.


What is an EIN and why do you need one?


Every United States citizen has a Social Security number that the government uses to keep track of the years that person has worked and how much money they’ve earned. An Employer Identification Number or Federal Tax Identification Number works the same way, but instead is used for businesses.


Like a Social Security number, this nine-digit code is unique to each business and is assigned by the Internal Revenue Service (IRS) as way to identify each business. EINs are only available to businesses that operate in the United States.


Sole proprietorships without employees do not technically need to have an EIN. However, having one can be helpful, especially if you are planning to hire help in the future. If you don’t have an EIN, you’ll need to use your Social Security number in all places that require an EIN—which could pose a personal security risk if the wrong person gets a hold of any official business documents you may file. Additionally, when the time comes to file for all your taxes such as federal, state, quarterly, and annually, using an EIN makes filing easier.


You also need an EIN if your business would like to accept credit cards as a form of payment through a payment processing company, per federal law. And if you decide you need a business bank account, credit card, or loan, an EIN may be required by some institutions.


The bottom line? Having a barrier between your personal life and assets and your business assets is always a good thing, and an EIN is one more way to accomplish this.


[READ MORE: 8 Steps to Set Up Payroll]


How to get an EIN


The Internal Revenue Service offers the following three steps to apply for an EIN online. You can apply for your EIN by clicking here.


1. Determine your eligibility.


If your principal business is located in the United States or United States Territories, you may apply for an EIN online. To apply, having a valid Taxpayer Identification Number such as a Social Security number or an Individual Taxpayer Identification number is a must. There is a daily limit on EINs of issuance to one per responsible party per day.


2. Review and carefully complete the online application.


Since the application needs to be completed in one session, get familiar with the application prior to filling it out. The application may require you to fill out information that you don’t always have access to, so it’s important to gather all required information before you begin. Otherwise, the application form will expire after 15 minutes of inactivity and require you to start over.


3. Submit your application.


After you have completed all the EIN application validations, you will immediately get your EIN, which you can download, save, and print for future reference.


Need more business startup advice? Check out our articles for small business owners and solopreneurs.

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