Do I Need an EIN for My Small Business?
Short answer
You generally need an Employer Identification Number (EIN) if you hire employees, operate as a partnership or corporation, pay certain excise or employment taxes, or change your business structure or ownership. Even when it isn't required, many owners get one for banking and to avoid giving out their Social Security number. EINs are free from the IRS.
What an EIN is
An EIN is a nine-digit federal tax ID for a business. It works like a Social Security number for the company and is used on tax filings, payroll reports, and bank applications.
When you generally need one
- You hire employees
- You operate as a partnership or corporation
- You pay certain excise or employment taxes
- You change your business structure or ownership
If you're forming an LLC, see why forming an LLC matters and LLC bookkeeping basics.
Why get one even if it isn't required
- Banks often ask for one to open a business bank account.
- Clients who ask for your tax ID get the EIN instead of your Social Security number.
- It helps separate personal and business finances.
How to get one, for free
Apply directly at IRS.gov. The IRS never charges for an EIN, so skip any site asking for a fee. The online application must be finished in one session and times out after 15 minutes of inactivity, so have your business details ready. A sole proprietor generally needs only one EIN, even with several trade names.
When you need a new one
Changing structure, such as a sole proprietorship incorporating or entering a partnership, generally requires a new EIN.
Starting or restructuring a business?
We can help you set things up correctly from day one, from the EIN to the books.
Frequently asked questions
How much does an EIN cost?
Nothing. The IRS issues EINs free of charge at IRS.gov. Avoid websites that charge a fee for one.
Can a sole proprietor get an EIN?
Yes. A sole proprietor may need one, for example to hire employees, and can request one for banking or other purposes even if it isn't required.
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