How To Get an Employer Identification Number
Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.
Danielle is a writer for the Finance division of Fit Small Business. She has owned a bookkeeping and payroll service that specializes in small business, for over twenty years.
An employer identification number (EIN) is a unique nine-digit number that identifies your small business when you file taxes, open a business bank account, get a business loan, or perform other business activities. Obtaining an EIN is free, and you can apply for it online, by fax, or by mail.
Online Application
The quickest and most efficient way to apply for an EIN is online through the IRS. The online questionnaire takes about 10 minutes, and there are no forms to fill out. You’ll receive an EIN right away online, and it can be used immediately for most business purposes. However, you’ll need to wait about two weeks before you can use the EIN to file taxes electronically.
Paper or Fax Application (Form SS-4)
If you’d rather apply by mail or fax, first you’ll need to fill out an IRS Form SS-4 Application for EIN.
Form SS-4 Source: IRS
Form SS-4 is a one-page form that’s easy to fill out. You’ll need the following information:
- Business name and address
- Responsible party for the business. Generally, this is the same person who is completing the form. This can be an owner, partner, or officer of the business.
- The SSN of the responsible party
- Reason you need an EIN
- Type of business you have, such as a corporation, partnership, limited liability company (LLC), or nonprofit
- If LLC, the number of members
- Date the business started and number of employees
- Last month of your business’ accounting year, usually December
There’s also a question on Form SS-4 which asks if your estimated employment tax is under $1,000. If it is, you can file Form 944 annually instead of Form 941 quarterly to report estimated employment taxes. Businesses must submit Form 941 or 944 to the IRS if they withhold income taxes, Social Security taxes, or Medicare taxes from employee wages.
Faxed SS-4 applications take about one week to process. Mailed applications take about four weeks to process.
Who Needs an EIN
If you answer yes to any of the following questions, the IRS requires you to have an EIN:
- Do you operate as a corporation, partnership, multimember LLC, or nonprofit organization? (Learn more about different types of business structures.)
- Do you have employees, including your spouse or children?
- Do you have a Keogh plan (a tax-deferred retirement plan for self-employed individuals)?
- Do you file an Employment, Excise, Alcohol, Tobacco, or Firearms tax return?
- Do you withhold taxes on income other than wages paid to a nonresident alien?
- Are you involved with a trust, estate, real estate mortgage investment conduit, farmers co-op, or plan administrator?
Beyond this, you may also need an EIN if you plan to do the following:
- Ask vendors to pay you for goods or services provided: When you perform work for a vendor, the vendor will most likely ask you for a W-9 form before they pay you. A W-9 form provides the vendor with your EIN to include on your Form 1099. If you’re self-employed and don’t have an EIN, you’ll have to provide your Social Security number.
- Open a business bank account
- Obtain a business loan
- Apply for a business credit card
- Build business credit: Just like a personal credit score, every business has a business credit score. Suppliers and lenders may check business credit to determine if they want to work with you. Learn more about how to build business credit.
- Apply for government licenses or permits or bid on government contracts
- Supply Form 1099s to independent contractors: You must issue a 1099 to any independent contractor that you pay $600 or more in one year. If that applies to you, you need an EIN even if you don’t have employees. Ask your accountant or tax professional for more details.
The bottom line is that, unless you’re a sole proprietorship or single-member LLC with no employees, you’re required to have an EIN. Even if you do fall into one of those categories, you may still want an EIN when getting a business loan, business credit card, or engaging in other business activities to avoid having to disclose your Social Security number.
The benefits of getting an EIN include the ability to preserve limited liability for single-member LLCs and keep business and personal finances separate. You can also reduce the chance of identity theft by protecting your Social Security number.
When You Need a New EIN
In most cases, once you get an employer identification number, it’ll be yours for the life of the business. However, there are a few specific cases where you’ll need a new EIN:
- You change business structures, such as a sole proprietor becomes a partnership or corporation
- A partnership is terminated and a new partnership is started
- You purchase or inherit a business
- Corporation receives a new charter from the secretary of state
- You become a subsidiary of a corporation
- Sole proprietorship declares bankruptcy
You don’t need a new EIN for the following:
- Business name changes
- Business location changes
- Operating multiple businesses
- Corporation or partnership declares bankruptcy
Learn more details about when you need a new EIN.
What To Do If You Misplace Your EIN
If you applied for your EIN by fax or mail, try to keep your EIN letter in a safe place. If you applied online for an EIN, you’ll be given an opportunity to print out a confirmation of your EIN and store it in a safe place. If you use accounting software like QuickBooks Online, you can scan important documents like your EIN letter and store them in your system for quick reference.
However, if you do lose it, it’s relatively simple to retrieve. You can look up an old tax return or bank records to find it. Alternatively, you can call the IRS Business & Specialty Tax Hotline at (800) 829-4933 and select EIN from the list of options.
Once connected with an IRS representative, tell them you lost or misplaced your EIN. The representative will ask you a few security questions before providing the number. The hours of operation are 7 a.m. to 7 p.m. local time, Monday through Friday.
Bottom Line
If your small business has employees or is a partnership or corporation, an EIN is required. Receiving an EIN is free and you can quickly and easily file online.
