An Employer ID Number (EIN), also called a federal tax ID number (FEIN), is a numerical identifier used by the IRS for businesses and other types of entities, such as charities or trusts. Getting an EIN is an absolute requirement if your business has employees. While not all businesses technically need an EIN, it makes good sense to apply for one since banks often require an EIN before you can get a business credit card, and vendors often require it to do business with you.
Applying for an EIN is a crucial part of starting and running a business. The process is fairly straightforward, but there’s a lot you’ll need to figure out about your business before you apply for an EIN. Read on to find out how to apply for an EIN number and important issues associated with your federal tax ID number.
Steps to Take Before Applying for an EIN
Before applying for an EIN, there are some aspects of your business that you’ll need to figure out in order to complete the application. It is a good idea to go online, download the PDF of IRS Form SS-4, Application for Employer Identification Number, and fill it out as practice before doing the real application.
Here are some of the questions about your business you’ll need to have answered in order to effectively fill out the EIN application.
The first two line items on Form SS-4 concern the legal name of your business entity, or individual, that is requesting an EIN. The second line then asks for the trade name of the business if it’s different from the legal name. Registering a business name is an important prerequisite for getting an EIN and should be one of the earliest steps in starting your business. When you register your business’s name, you should have the legal names chosen plus file a Doing Business As (DBA) if you want a trade name that’s different from the legal business name.
Filing as a Responsible Party
In order to apply for an EIN, you’ll need to designate someone to be the responsible party who has the authority to make this kind of filing. You’ll have to provide the name of the responsible party as well as either their Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN) or EIN. According to the IRS, the responsible party should be “the individual or entity that controls, manages, or directs the entity and the disposition of the entity’s funds and assets.” Additionally, the responsible party must be an individual, not an entity, unless the EIN application is for a government entity. Typically for small businesses, the responsible party is a general partner, owner or principal officer of the company.
Type of Business Entities
A very important section of Form SS-4 concerns the legal entity of your business, what you might call its business structure. The type of business entity your company adopts is directly related to how the IRS recognizes and taxes your business. Figuring out how to structure your business is a critical early step you should take when starting a business, in part because applying for an EIN requires having an established entity.
For instance, if your business is structured as a sole proprietorship, you’d check off that box on line 9 and write in your SSN. If your business is a corporation, you’d check off that box and fill in the form number you filed your corporation with. Another level of complication is if your business is a limited liability company (LLC). When structured like this, you have to elect for how your business will be taxed.
How to Apply for an EIN
There are basically four ways you can apply for an EIN from the IRS. You can apply for an EIN online, by fax, by mail or by telephone, although the latter is reserved for international applicants. Here’s a look at how to apply for an EIN through these different channels.
Applying for an EIN online is the preferred method for customers to apply for and obtain an EIN. In order to apply for an EIN online, you’ll use the IRS’s EIN Assistant page and begin the application process. Once you complete the application, the information will be validated during the online session and your EIN gets issued to you immediately. You can use the EIN online application process for all entities whose principal business, office or agency or legal residence is located in the United States or U.S. Territories. International applicants cannot apply for an EIN online.
You can also apply for an EIN is by fax. You can fax the completed Form SS-4 application to the appropriate fax number. If your principal business, office or agency, or legal residence is located in one of the 50 states or District of Columbia, then you’ll fax the form to:
If no legal residence, principal place of business, or office or agency in any state in the U.S., then you’ll fax the form to:
If you’re outside the U.S., you’d fax the form to:
If you provide your fax number with the application, a fax will be sent back with the EIN within four business days.
Apply for EIN by Mail
Another traditional method is applying for an EIN by mail. The main drawback of this method is the processing timeframe for an EIN application through the mail is four weeks. As with applying for an EIN by fax, you’ll need to mail Form SS-4 to the correct address. For domestic businesses, you’ll address the form to
Attn: EIN Operation
Cincinnati, OH 45999
For international businesses, you’ll address the form to
Attn: EIN International Operation
Cincinnati, OH 45999
Apply for EIN by Telephone: International Applicants
For international applicants, you can apply over the phone by calling this number between 6 a.m. and 11 p.m. Eastern Time, Monday through Friday, in order to obtain an EIN:
The individual making the call must be the responsible party and thus authorized to receive the EIN and answer questions found in Form SS-4. You could also fill out the Third Party Designee section of the form only if you want to authorize the named individual to receive the entity’s EIN and answer questions about the completion of Form SS-4.
Frequently Asked Questions About EIN
There are many common questions surrounding the application for an EIN. Here are some of the most frequently asked questions about EINs.
- How long does it take to get an EIN? The answer to this depends on your method of application. If you apply for EIN online, your information will get processed, validated and then you’ll be issued your EIN immediately. If you apply by fax, it typically takes four business days to get your EIN. And, if you apply through the mail, the process takes at least four weeks.
- How much does it cost to apply for an EIN? According to the IRS, applying for an EIN is a free service they offer. If you find a website that charges a fee for getting an EIN, stay away because it is a truly free service — you shouldn’t have to pay.
- Do I need an EIN? This also depends on your business structure and what you plan to do with your business. First and foremost, if you have employees or plan to hire some, then you must have an EIN. If you’re a sole proprietor and don’t plan to hire anyone, then you technically don’t need an EIN. However, it is generally a good business practice to get an EIN for any type of business since institutions and organizations like banks require EINs in order to open business bank accounts, for example. Review this IRS page to find out if you need an EIN.
- How do I lookup my EIN or the EIN of another business? You can read here about several ways to find your EIN number or lookup another company’s.
There are some important additional rules and regulations you should be aware of when applying for an EIN. When you go to apply for an EIN, there is a daily limitation set by the IRS of issuing one EIN per responsible party per day. This limitation applies to all forms of EIN requests, whether online, by fax or by mail. Another important issue is if you want to allow a third party to complete and file the EIN application on your behalf. To authorize a third party to do this, you must fill out the Third Party Designee section of Form SS-4 and include your signature to make it valid.
EIN Scams to Watch For
An EIN is often described as a Social Security Number for your business. This is an apt description, especially since both numbers are susceptible to scams. One of the most common, newer EIN scams involves fake EIN application websites. There are sites out there that will charge up over $100 to apply for an EIN, which is completely unnecessary and unsanctioned by the IRS. Applying for an EIN is a free service offered by the IRS and you should stay away from any sites you encounter that charge you for the process.
Another common scam is using stolen EINs in a form of identity theft, similar to using a stolen Social Security Number. According to the IRS, business identity theft falls into two buckets:
- Non-tax related
Typical actions an identity thief can do with your EIN include filing false tax returns and getting refunds, hacking into your business bank accounts, abuse your business credit and hurt its business credit rating. Stay vigilant for this type of EIN fraud by monitoring your financial and credit accounts constantly.
The Bottom Line
Even if your business doesn’t technically need an EIN to be in business, it’s a smart move to get one anyway. Getting an EIN for your business allows you to separate you as an individual from your business, which is very important for opening business bank accounts and business credit accounts. This makes for better bookkeeping since you’ll be able to keep your personal financials and business financials separate. Remember to treat your business’s EIN like a Social Security Number; keep it recorded somewhere you’ll always be able to reference it and keep it from falling into other people’s hands.