Employer Identification Number (EIN)

An employer identification number (EIN) is a unique nine-digit number assigned by the IRS to identify a business entity for federal tax purposes. Formatted as XX-XXXXXXX, it functions as a federal tax ID for a business, similar to a Social Security number for an individual. The IRS issues EINs at no cost through an online application.

How an EIN works

Once assigned, an EIN is permanent and tied to that specific business entity. It does not expire, does not require renewal, and cannot be transferred to another business. Certain structural changes—such as converting a sole proprietorship to a corporation—require a new EIN, but the IRS provides specific guidance on when this applies.

Apply online through the IRS website to get your business’ EIN immediately. Fax applications take approximately six business days; mail applications can take up to 30 days.

Why an EIN matters

An EIN separates a business' tax identity from its owner's personal identity. For sole proprietors and single-member LLCs, this is especially important: Using an EIN rather than a personal Social Security number on business documents reduces the risk of identity theft.

Beyond privacy, an EIN is a functional requirement for most business activity. It’s commonly required to file federal taxes, open a business bank account, hire employees, and apply for many licenses and permits.

Common uses

• Opening a business bank account: Most financial institutions require an EIN before establishing a business account.
• Hiring employees: Any business with employees must have an EIN to report payroll taxes and issue W-2 forms.
• Filing business tax returns: Corporations, partnerships, and multi-member LLCs file federal returns under their EIN.
• Applying for business licenses and permits: Many federal, state, and local applications require a tax ID number.
• Applying for business credit: Lenders and credit card issuers typically require an EIN when extending credit to a business entity.

EIN vs. Social Security Number

An SSN identifies an individual; an EIN identifies a business. Sole proprietors without employees are not always required to obtain an EIN and may use their SSN for federal tax purposes. However, doing so exposes their personal identifier on vendor forms, contractor agreements, and other business documents. Obtaining an EIN, even when not strictly required, is generally advisable for any business operating as a separate legal entity.

Key considerations

A business should apply for an EIN after its legal formation is complete. Applying before the entity officially exists can create mismatches in IRS records.

An EIN cannot be canceled once issued, but the IRS will close the associated tax account upon written request when a business dissolves. The number itself remains on IRS records permanently.

Related terms

• Business entity type: The type of legal entity (LLC, corporation, partnership) determines whether and when an EIN is required.
• Business dissolution: When a business closes, the EIN account should be formally closed with the IRS in writing.
• Nonprofit formation: Nonprofits must obtain an EIN before applying for 501(c)(3) tax-exempt status.

FAQs about EIN

Is an EIN the same as a federal tax ID number?

Yes. EIN, federal tax ID number, and FEIN all refer to the same nine-digit identifier issued by the IRS. "Federal tax ID" is the more general term commonly used by banks and licensing agencies.

Can a sole proprietor use their SSN instead of getting an EIN?

A sole proprietor with no employees and no excise tax obligations is generally not required to obtain an EIN. However, using an SSN means it appears on business documents, a risk that an EIN eliminates at no cost.

How do I find my EIN if I've lost the original confirmation?

Your EIN also appears on previously filed federal tax returns, business bank account documents, and any licenses obtained using the number.

Can a business have more than one EIN?

A single business entity is assigned one EIN. A business owner who operates multiple legally distinct entities will have a separate EIN for each entity, because each is independently registered with the IRS.