A Federal EIN (Employer Identification Number) is like a social security number for a business.

An EIN is required to operate most businesses. If you have employees, withhold taxes, or file tax returns (e.g. excise, employment, alcohol, or tobacco) an EIN is needed. An EIN is also required to operate a trust, estate, partnership, corporation, or nonprofit organization. One of the few entities that does not always require an EIN is a sole proprietorship, but depending on the business, even a sole proprietorship may need an EIN.

When you file a tax return, an EIN is what the IRS uses to identify your business. In order to apply for a business bank account, funding, and to make tax payments, you will also need an EIN. It’s recommended to apply for an EIN before you launch your business.

To obtain an EIN, the first step is to establish a business entity. Your business entity is established at the state level with the secretary of state office. Once the entity is established, you’ll need to complete IRS Form SS-4 which can be done online at the IRS website, by phone, mail or fax. During the application process, you’ll be asked to identify your business entity structure – good thing you established this with the secretary of state first!

ScaleTip: If applying for an EIN online, your new EIN is instantly generated. Make sure to print the confirmation page with your newly generated EIN. Once you exit this page, you cannot re-access it and will not see your EIN again until the IRS mails your confirmation which can sometimes take months.

Contributed By:
Sergio Salinas, CPA
Tax Manager