What Is an EIN? Who Needs One and How to Get It Free

An Employer Identification Number (EIN) is a nine-digit number the IRS uses to identify a business, written as XX-XXXXXXX. Think of it as a Social Security number for your company: it goes on tax returns, payroll filings, and bank applications, and it lets you keep your personal SSN off business paperwork. You'll also see it called a FEIN (Federal Employer Identification Number) or a federal tax ID number. They're all the same thing.

Who needs an EIN

You're required to have one if your business:

• Has employees — even one, even part-time. Payroll tax filings and W-2s can't be done without it.
• Is a corporation or a partnership, including multi-member LLCs.
• Files employment, excise, or alcohol, tobacco, and firearms tax returns.
• Withholds tax on income paid to a non-resident alien.
• Has a Keogh or solo 401(k) retirement plan in certain situations.
• Is a trust, estate, non-profit, or similar organization.

A sole proprietor or single-member LLC with no employees generally isn't required to get one and can use their own SSN for federal income tax. But the moment you hire, you'll need an EIN for employment taxes.

Why get one even if you don't have to

Freelancers and one-person businesses often get an EIN voluntarily, for a few good reasons:

• Privacy. Clients usually ask for a Form W-9 before they pay you. Putting an EIN on it instead of your SSN means fewer copies of your Social Security number sitting in other people's files.
• Banking. Most banks ask for an EIN to open a business account, and keeping business money separate makes bookkeeping and taxes far simpler.
• Credibility. An EIN on invoices and contracts signals an established business. If you bill clients, how to create an invoice covers where it goes.

How to get an EIN — free

Applying is free and, online, takes about ten minutes. The IRS issues the number immediately when the application is complete.

1. Check you're eligible to apply online. Your business must be located in the US or a US territory, and the "responsible party" — the person who owns or controls the business — needs a valid SSN or ITIN.
2. Have your details ready: legal business name, address, business structure, the responsible party's name and SSN or ITIN, the reason for applying, and, if you're hiring, when you expect to first pay wages.
3. Apply on IRS.gov. The application must be completed in one session; it times out after inactivity and can't be saved partway.
4. Download your confirmation letter at the end. This is your CP 575 notice, and it's the official record of your EIN. Save it somewhere safe.

You can also apply by fax or mail using Form SS-4, but those take days to weeks. International applicants without an SSN or ITIN apply by phone.

Watch out for look-alike websites that charge a fee to "file" for you. The IRS never charges for an EIN, and these services simply submit the same free form.

Where your EIN appears

Once you have employees, your EIN goes on:

• Form W-2, in box b, for every employee.
• Form 941, the quarterly federal payroll tax return, and Form 940 for federal unemployment tax.
• Form 1099-NEC for contractors you pay.
• Your business tax return.

Federal law doesn't require the EIN on an employee's pay stub, but many employers print it there anyway. It helps employees match their stub to their W-2, and lenders verifying income sometimes look for it. Are employers required to provide pay stubs? covers what states do require.

An EIN is federal — states have their own numbers

An EIN covers federal taxes only. If you have employees, you'll usually also register with your state for a state withholding account number (in states with income tax) and a state unemployment insurance account. These are separate IDs from separate agencies. Understanding payroll taxes explains what each one is for.

Lost your EIN?

Before calling anyone, check:

• Your CP 575 confirmation letter.
• A previous business tax return or payroll filing.
• Your business bank account or loan paperwork.
• Any state licenses or registrations you applied for with it.

If none of those turn it up, the responsible party can call the IRS Business & Specialty Tax Line at 800-829-4933 and, after verifying their identity, get the number over the phone.

Do you need a new EIN if your business changes?

Sometimes. You'll generally need a new one if you incorporate a sole proprietorship, take a partner into a sole proprietorship, or buy an existing business. You usually don't need one for a name change or a move. The IRS's "Do you need a new EIN?" guidance lists each case.

If you're about to hire your first employee, an EIN is step one — the small business payroll checklist covers the rest.

This article is general information, not tax or legal advice.