How to Get an EIN for Your Business: A Step-by-Step Guide for New Owners
Starting a new venture is an exciting step toward financial independence, but navigating the bureaucratic landscape can feel overwhelming. One of the very first, and most crucial, tasks on your checklist is setting up your business entity properly. If you want to hire employees, open a business bank account, or structure your company as a corporation or LLC, you are going to need an Employer Identification Number, commonly known as an EIN.
Think of an EIN as a Social Security Number for your business. It is a unique nine-digit number assigned by the IRS to identify your business entity for tax purposes. While not every small business is legally required to have one, obtaining an EIN is a smart move that offers significant benefits, including protecting your personal information and opening up new opportunities for growth. This guide will walk you through the entire process, making it simple to secure your business identity and start operations confidently.
Why Every New Business Should Get an EIN
Even if you are a sole proprietor operating out of your home, there are compelling reasons to apply for an EIN. It is not just for large corporations with hundreds of employees.
Protecting Your Privacy: Without an EIN, you must provide your personal Social Security Number to clients and vendors on tax forms like the W-9. Using an EIN keeps your personal identity secure.
Opening a Business Bank Account: Almost all financial institutions require an EIN to open a dedicated business checking or savings account, which is essential for keeping your personal and professional finances separate.
Hiring Employees: If you plan to bring on staff, you are legally required to have an EIN to handle payroll taxes, withholdings, and reporting to the government.
Building Business Credit: To apply for business credit cards or loans, lenders need a way to check your business's credit history, which is attached to your EIN, not your personal credit profile.
Step 1: Determine Your Eligibility and Business Structure
Before you start the application, you need to confirm that you are eligible to obtain an EIN. The main requirement is that your business must be located in the United States or its territories, and the person applying must have a valid Taxpayer Identification Number, such as a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Know Your Entity Type
The IRS needs to know how your business is organized to understand how to tax it. Common structures include:
Sole Proprietorship: A business owned by one person with no formal legal entity registration.
Limited Liability Company (LLC): A hybrid structure that provides the liability protection of a corporation with the pass-through taxation of a partnership.
Corporation: A legal entity that is separate from its owners (shareholders).
Partnership: A business owned by two or more people.
Step 2: Gather Necessary Information for the Application
The online application process is fast, but it is not something you can easily stop and restart. To avoid frustration, gather the following details before you begin:
Responsible Party Information: The legal name and SSN or ITIN of the person who controls the business assets.
Legal Business Name: The official name of your company. If you are a sole proprietor using your own name, this is simple. If you have a DBA (Doing Business As) name, use that.
Business Address: A physical address for the business (a P.O. Box is generally not sufficient for the main application form, though you can use one for mailing purposes later).
Reason for Applying: The IRS will ask why you are applying (e.g., hiring employees, opening a bank account, starting a new business, changing organizational structure).
Opening Date: The month and year you started or acquired the business.
Step 3: Apply Online Through the IRS Website
The fastest and most efficient way to get your EIN is through the official IRS website. It is completely free, and you will receive your number immediately upon completion.
The Process
Navigate to the IRS EIN Assistant: Search for "IRS EIN Assistant" to find the correct page. Be cautious of third-party websites that look official but charge fees for a service that is free from the government.
Verify Eligibility: The site will check to make sure you can apply online.
Complete the Form: Enter the information you gathered in Step 2. Take your time to ensure all spelling and numbers are accurate.
Submit and Receive: Once submitted, the system validates the information and generates your EIN instantly.
Important Note: You can only submit one application per responsible party per day. If you make a mistake, you cannot fix it on the same day.
Step 4: Alternative Application Methods
While the online method is recommended for speed, there are other ways to apply if you prefer not to use the internet.
By Mail (Form SS-4): You can download and fill out Form SS-4 and mail it to the IRS. This process can take several weeks, so it is not ideal if you need your number quickly.
By Fax (Form SS-4): You can fax the completed Form SS-4 to the IRS. This is generally faster than mail, typically taking about four business days to process.
Step 5: Post-Application Steps and Best Practices
Once you have received your EIN, the work is not quite finished. Proper record-keeping is vital.
Save Your EIN Confirmation Letter: The IRS will provide a PDF confirmation letter immediately after your online application. Download and print this letter immediately. It is the official proof of your EIN and is often required by banks to open an account.
Update Business Documents: Use your new EIN on all tax filings, contracts, and banking documents.
Keep Your Information Updated: If your business moves, changes its name, or changes its responsible party, you must notify the IRS to keep your records current.
Securing an EIN is one of the most rewarding first steps in your entrepreneurial journey. It legitimizes your business, protects your personal assets, and sets the foundation for financial management and future growth.