Employer Identification Number (EIN)
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An Employer Identification Number is a unique nine-digit number assigned by the IRS to identify a business entity for federal tax purposes. It functions much like a Social Security Number does for individuals and is required for a wide range of business activities including filing taxes, opening a business bank account, hiring employees, and applying for business licenses.
In depth
Most businesses in the United States are required to obtain an EIN, including corporations, partnerships, LLCs with more than one member, and any business with employees. Even sole proprietors who have no employees may need one in certain circumstances, such as when filing certain tax returns or applying for business credit. Obtaining an EIN is a straightforward process done directly through the IRS, either online, by mail, or by fax, and there is no fee involved.
For startups and newly formed companies, applying for an EIN is typically one of the very first steps taken after incorporation. It is a prerequisite for setting up payroll, establishing business banking relationships, and entering into contracts with certain vendors and clients who require it for their own tax reporting. International businesses that have US tax obligations or operate in the US market may also need to obtain an EIN regardless of where they are incorporated, making it a relevant requirement for foreign-owned entities doing business in the United States.