EIN Meaning

An Employer Identification Number (EIN) is a unique identifier given by the IRS to businesses, nonprofit organisations, or trusts. It’s used for things like tax reporting and applying for licenses. Once you get an EIN, it's yours for life and doesn’t need to be renewed, even if your business closes.

Also known as: Federal Tax Identification Number or Tax ID Number.

Format: The EIN is a nine-digit number in the format xx-xxxxxxx. Businesses use it for tax purposes, similar to how individuals use their Social Security Number (SSN).

Do you need an employer identification number?

You need an EIN if you:

  • Run a partnership or corporation.
  • Operate a sole proprietorship or single-member LLC without employees but need to open a business bank account, join brokerage firms, or apply for licenses.
  • File tax returns for excise, employment, alcohol, tobacco, or firearms.
  • Have a Keogh plan.
  • Are a foreign business that needs to file US tax returns.
  • Are self-employed and need to report business income.

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How to apply for an employer identification number?

Getting an EIN is easy and free. You can simply apply for an EIN on the IRS website, by phone, or by fax.

What you need:

  • Legal name of your business.
  • ID number and name of the responsible person.
  • Type of business.
  • Reason for applying.
  • Date your business started or was acquired.
  • Number of employees expected in a year.

Note: You’ll need a new EIN if you change your business’s legal structure or ownership (e.g., from a sole proprietorship to a corporation). However, if you just change the business name or location, a new EIN is usually not required.

How to find an employer identification number

Your EIN can be found on tax returns, bank account or credit application forms, state licenses or permits, forms used to report work as an independent contractor, or forms for reporting business payments.

Read more: 12 essential tax write-offs for small businesses

How long does it take to get an EIN?

  • Online Application: Immediate.
  • Fax Application: Up to two weeks.
  • Mail Application: Four to five weeks.

Key takeaways

  • An EIN is a unique nine-digit number for businesses.
  • The IRS uses EINs to identify businesses for tax reporting.
  • All businesses that meet certain criteria need an EIN before they start operating.
  • Applying is free and can be done on the IRS website.
  • EINs are required for opening bank accounts, applying for credit, and tax reporting.

By understanding how to get and use your EIN, you can ensure your business runs smoothly and complies with all necessary regulations.

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