How to Get an EIN for Your Sole Proprietorship: A Step-by-Step Guide


As a solo business owner, reaching the stage where you need an Employer Identification Number (EIN) is a clear sign of success. It means your business is growing—perhaps you are ready to hire your first employee, open a dedicated business bank account, or establish a retirement plan.

While many sole proprietors can operate using only their Social Security Number (SSN), obtaining an EIN is often a legal requirement or a strategic move to protect your identity. This guide provides a clear, step-by-step walkthrough on how to secure your EIN directly from the IRS for free.

Do You Really Need an EIN?

Before diving into the application, it is important to confirm why you need this nine-digit number. For a sole proprietorship, an EIN becomes mandatory if you:

  • Hire employees: Whether they are full-time, part-time, or seasonal, you need an EIN to report payroll taxes.

  • Open a business bank account: Most financial institutions require an EIN to separate your personal and business finances.

  • Start a retirement plan: Plans like a Solo 401(k) or SEP IRA require an EIN for tax reporting.

  • File specific tax returns: This includes excise taxes or alcohol, tobacco, and firearms returns.

Even if not required, many owners get an EIN for privacy protection, allowing them to provide a business ID to clients and vendors instead of their personal SSN.

Step 1: Gather Your Information

The IRS application must be completed in one session; you cannot save your progress. Before you start, have the following details ready:

  • Legal Name and SSN/ITIN: You will be the "Responsible Party."

  • Business Address: A physical U.S. address (P.O. Boxes are generally not accepted for the business location).

  • Business Start Date: The date you officially began operations.

  • Reason for Applying: (e.g., "Started a new business" or "Hired employees").

Step 2: Choose Your Application Method

There are several ways to apply, but the online method is highly recommended for its speed and ease.

Option A: Online Application (The Fastest Way)

The IRS EIN Assistant is available Monday through Friday, from 7:00 a.m. to 10:00 p.m. Eastern Time.

  1. Visit the official IRS.gov website and search for "Apply for an EIN Online."

  2. Select "Sole Proprietor" as your entity type.

  3. Answer the "Why are you applying?" question.

  4. Enter your personal details as the owner.

  5. Provide the physical location and name of your business.

  6. Submit and Receive: Your EIN is generated immediately.

Option B: Fax or Mail (Form SS-4)

If you prefer paper or cannot use the online system, you can file IRS Form SS-4.

  • By Fax: Send the completed form to the IRS fax number for your state. You typically receive your number within four business days.

  • By Mail: This process can take up to four weeks.

Step 3: Identify Your Business Activity

During the application, the IRS will ask you to categorize your business. You will choose from broad categories like:

  • Construction

  • Real Estate

  • Retail

  • Professional Services (Consulting, Accounting, etc.)

If your specific niche isn't listed, you can select "Other" and provide a brief description. This helps the IRS understand your tax filing needs.

Step 4: Secure Your Confirmation Letter (CP 575)

Once the online application is complete, you will receive a PDF confirmation notice called Form CP 575.

Important Note: This is your official proof of your EIN. Download and save this document immediately. You will need it to open bank accounts, apply for business licenses, and set up payroll services. The IRS does not provide a digital copy later; if you lose it, you will have to request a physical replacement via mail.

Avoiding Common Pitfalls

To ensure a smooth application process, keep these tips in mind:

  • The IRS Is Free: Never pay a third-party website to "file" an EIN for you. The IRS provides this service at no cost.

  • One Per Day: The IRS limits EIN issuance to one responsible party per day.

  • Verify Your SSN: Ensure your personal tax records are up to date. If your name or SSN has a mismatch in the IRS database, the online system will trigger a "Reference Number" error, requiring a manual application via fax.

Conclusion: A Foundation for Growth

Securing an EIN is a straightforward but essential step in the professionalization of your sole proprietorship. It acts as the "Social Security Number" for your business, allowing you to hire a team, protect your privacy, and build a credible brand.

By following these steps, you can move past the paperwork and get back to what matters most—running your business.



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