What is an EIN Number and Do I Need It?

An EIN (Employer Identification Number) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. Often called a Tax ID or business tax ID, it’s used for filing tax returns, managing employment tax, and communicating with government agencies.

You need an EIN if your business is structured as an LLC, corporation, or partnership, or if you plan to hire employees, apply for business licenses and permits, or open a business bank account. Businesses seeking tax-exempt status must also obtain one. Even sole proprietors may choose to apply for an EIN to separate personal and business finances and reduce the risk of identity theft.

To get an EIN, you can complete the EIN application online via the IRS website, which is the fastest option, as you’ll get the EIN immediately. If applying by fax, you can expect a response within four business days. There is no fee to apply for an EIN online, by fax, or through other official ways to apply, such as mail or phone (for applicants outside the U.S.).

The application requires one responsible party, identified by a Social Security Number or ITIN. Only one person’s identity can be linked, even if there are multiple owners. You should register your business name first, since the IRS does not verify name availability with your state before assigning the EIN. Mistakes here can delay processing, and changing the number assigned later can be time-consuming.

Once issued, the EIN becomes a permanent federal tax ID for your company. If your organization is legally formed under a new structure or name, the old EIN may become inactive, and a new EIN may be required. Using your EIN helps establish business credit, and it's often needed by financial institutions and state agencies for compliance and tax reporting.