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Business EIN: Your Federal Tax ID Number

Business EIN: Your Federal Tax ID Number

Almost all types of business need an Employer Identification Number (EIN). An EIN (which is also known as a Federal Employer Identification Number or FEIN) is issued by the IRS and is used to identify a business in much the same way as a Social Security Number (SSN) is used to identify an individual. Your EIN is required on your business tax returns, business tax account, and tax-related documents. It is also required by many banks, financial institutions, credit card companies, and vendors. 

Some states require a separate state tax ID number; other states use the Federal Tax ID number.

CT Tip: Both your individual SSN and your business EIN are nine digits. But SSNs take the form 123-45-6789. In contrast, EIN numbers take the form 12-3456789.

Common names for the EIN include:

  • Tax ID number
  • Business Tax ID
  • Business Taxpayer identifying number
  • Business Taxpayer ID number
  • Business Tax ID number
  • Federal Business Tax ID

Does My Business Need a Federal Tax ID Number?

Nearly every form of business organization—including sole proprietorships, partnerships, corporations, LLCs, nonprofits, estates, and trusts—needs an EIN. 

CT Tip: Although every business that has employees needs an EIN, the “Employer” label in “EIN” doesn’t mean a business has to have employees to need an EIN. For example, corporations, trusts, and partnerships need an EIN whether or not they have employees.

Corporations: If your business is a corporation, it will need an EIN. It doesn’t matter if it’s taxed as a  C Corporation or an S Corporation. Also, if a business is an LLC or partnership that elects under the IRS “check-the-box” rules to be taxed like a C Corporation or S Corporation, it will need an EIN.

LLCs: If your LLC has two or more owners, it must have an EIN. This is true whether it accepts the default classification of being taxed as a partnership or it elects to be taxed as a corporation (including an S corporation).  If an LLC has only one owner, the IRS disregards the LLC and all the income, loss and deductions are reported on the individual owner's federal income tax return as if you were a sole proprietor. 

Sole proprietors: If you run your business as a sole proprietor and you don’t have any employees, the IRS generally allows you to use your individual tax ID (e.g., SSN) as your FEIN. But you might want to get a business EIN – even if you don’t have to – for other reasons: It helps avoid embarrassment or delay in payment if a business lead or a customer wants an EIN (instead of SSN) to seal a deal or pay your invoice.  Also, a bank might require an EIN to open a business checking account. For a sole proprietor, using an EIN instead of your SSN adds credibility. It also helps protect the privacy of your SSN.

The IRS requires you to have an EIN, even though you’re a sole proprietor, if: 

  • You have a Keogh pension plan
  • You have any employees 
  • You have to file excise tax returns (e.g. alcohol, tobacco, firearms)

What Information Is Required for an EIN?

When applying for your business EIN, you’ll need to provide certain information including the following:

  • The legal name of the individual or entity for which the EIN is being requested, its address, and trade name (your “doing business as” DBA name, if you have one)
  • Responsible party’s name and tax ID (generally a person with authority to control, direct, or manage your business and disposition of its assets and funds)
  • Type of entity (e.g., corporation, sole proprietor) and date your business was started or acquired
  • Reason for applying (e.g., starting a new business, hiring employees, acquiring an ongoing business, changing type of entity)
  • The highest number of employees you expect in the next 12 months, whether you’ll pay employment taxes annually (if you qualify) or quarterly, and first date wages were paid
  • If your business is an LLC, the IRS will ask for the number of members. 

You’ll also need to choose, from the list below,  which best describes your principal business activity:

  • Accommodation & food service
  • Construction
  • Manufacturing
  • Finance & Insurance
  • Health care & social assistance
  • Retail
  • Real estate
  • Rental & leasing
  • Transportation & warehousing
  • Wholesale-agent/broker or Wholesale-other
  • Other

How to Apply for an EIN

If your business is based in the United States, you can apply for an EIN in one of three ways: online, by fax, or by mail. An online application is the speediest: you get your EIN immediately. Fax takes several days and mail takes five to six weeks. Foreign businesses can apply via fax, mail or by phone (not a toll-free call).  Get the details in our article "How to Get an EIN (Employer Identification Number)."

How to Find Your EIN if You’ve Forgotten It

Your business EIN is the equivalent of an individual's social security number. In the same way that you guard your social security number, you should take care to safeguard your EIN to reduce your risk of business identity theft. In fact, in its effort to reduce the risk of a taxpayer's identifying number getting stolen, there is no automated look-up for EINs. However, the IRS has provided guidance on how to find your number if you've forgotten it. The IRS's suggests that take these steps:

  • Find the confirmation that the IRS sent when you applied for your EIN
  • Contact your bank, state agency, or local agency if you supplied your number to open a bank account or obtain a business license
  • Locate a previously filed tax return, which should have your EIN on it.

If these measures are not successful, you will need to contact the IRS directly to ask the IRS to search for your EIN number. Call the Business & Specialty Tax Line at (800) 829-4933 between 7:00 a.m. - 7:00 p.m. local time, Monday through Friday. You will need to provide identifying information. In addition, you must be a person that is authorized to receive the number on behalf of the business. For example, you must be a corporate officer of a corporation or a manager (or authorized member) of an LLC. If you provide the requisite identification and proper proof of authorization, the IRS employee will give you your EIN number over the phone.

 

 

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