If you run a business in the United States, an Employer Identification Number, or EIN, is essential. This nine-digit number is issued by the Internal Revenue Service, who use it to identify your business for tax purposes. In many ways, it’s like a Social Security Number, but for a company instead of a person.
You’ll need an EIN for many different things: registering a new business, filing taxes, hiring staff, applying for business licenses, and getting insurance. Even if you are not in the US, you’ll need an EIN if you plan to run a business there. For example, I needed to get an EIN to sell books on Amazon, even though I have never lived in the US. And although it may seem intimidating to deal with the IRS, getting an EIN is actually quite straightforward.
In this Remitly guide, we’ll go through who needs an EIN, how to apply, and practical tips to make the process as smooth and stress-free as possible.
What is an Employer Identification Number?
If you’re familiar with Social Security Numbers in the US, you’ll know that the IRS uses them to identify every individual in its system. An EIN works the same way for businesses: it’s a business tax ID used to identify a company so that the IRS can keep track of financial activity.
An EIN is useful for various business operations:
- Filing business taxes with the IRS
- Opening a business bank account
- Hiring employees
- Establishing credit for your company
- Getting insurance
- Applying for business licenses
Who is eligible for an EIN?
EINs are offered to US-based businesses and individuals with a valid Taxpayer Identification Number. This can be a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
The ITIN is issued to people who need to pay taxes in the US, but aren’t eligible for a Social Security Number. This covers people doing business in the United States from abroad, and it’s how you get an EIN even if you don’t live in the country.
Who is required to get an EIN?
Lots of different businesses need an IRS EIN, from tiny sole proprietorships to giant corporations, partnerships, and nonprofits. Don’t make the mistake of thinking you’re too small to require one—even very small operations may need an EIN depending on their situation.
You need an EIN if your company:
- Has employees
- Needs to pay employment taxes, excise taxes, or alcohol, tobacco and firearms taxes
- Withholds taxes on income paid to a nonresident alien
If none of those apply to you, then you probably don’t need an EIN. That doesn’t mean you shouldn’t have one, though.
Among other benefits, having an EIN can help you keep your personal finances separate from business operations, which helps you stay compliant with tax law. Plus, it can come in handy when you want to open a company bank account, file state taxes, change your business’s structure, or complete other paperwork.
How to apply for your federal tax identification number
Applying for an IRS EIN is actually quite straightforward. After all, the IRS wants to make it as easy as possible to get this essential piece of identification to ensure compliance.
Here’s a step-by-step guide on how to apply for an Employer Identification Number online, by mail, or by fax.
Step 1: Form your company
Before you apply, you’ll need to officially create your company. If you’re creating a partnership, corporation, or LLC, that means registering it with your state before applying to the IRS.
That’s also true for tax-exempt organizations such as churches and nonprofits. You’ll need to legally establish your organization before you can be issued an EIN.
Step 2: Gather the necessary information
To start your business tax ID application, you need to prepare the following:
- The legal name of your company: In the case of a sole proprietorship, this could be your name. Note that the IRS only allows certain characters in business names:
- The letters A to Z, numbers 0 to 9, hyphens, and ampersands (&) are ok.
- Spell out symbols that the system won’t allow, like +, @, ., or #. So for Remitly.com, you would write Remitly Dot Com.
- For slashes (/), use a hyphen instead.
- Remove apostrophes without adding a space (Jim’s Store becomes Jims Store).
- Your business address: Don’t forget key details like apartment or suite numbers. The IRS only allows 35 characters for street addresses.
- The type of business structure: Are you a sole proprietorship, a partnership, an LLC, a corporation, or other?
- Your reason for applying: This might be because you are starting a new business, because you are hiring employees for the first time, or because you need to open a bank account.
- The taxpayer ID (SSN or ITIN) of the responsible party: The responsible party is the person in charge of the entity and its assets. You’ll need to provide this person’s name and signature as well.
Step 3: Choose your application method
The IRS offers four different ways to get your federal tax identification number:
Online
This is the fastest and easiest way to apply. Go to the IRS EIN website and click Apply Online near the top of the page. The online tool will help you get your business tax ID immediately.
You can only apply for one EIN in a day. The tool is available Monday to Friday, 7 AM to 10 PM Eastern time, and it can only be used by people whose principal place of business is located in the United States.
By phone (only for applicants not based in the US)
If you are located outside the United States but still need an EIN, you can apply by phone. Call +1-267-941-1099. The line is open Monday to Friday, 6 AM to 11 PM Eastern time.
By fax
There aren’t many institutions that still use fax to communicate these days, but the IRS does. You can apply for an EIN by faxing a completed Form SS-4 to +1-855-641-6935. Make sure to provide your fax number so that the IRS can fax your EIN back to you. This takes four business days.
By mail
To apply by mail, complete Form SS-4 and mail it to:
Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
You will get your EIN in about four weeks.
Step 4: Complete the application for your IRS EIN
Make sure you input all information correctly, and that it complies with the IRS rules around business names. If you apply by phone, like I did, it’s a good idea to fill out Form SS-4 first to make sure you have all the information you need. Being prepared like this helps you to avoid any delays in processing.
Step 5: Receive your EIN
Once you’ve applied for your EIN, it’s just a matter of waiting to get it. If you apply online, you’ll be issued an EIN immediately. Make sure to print out your confirmation letter for your company records.
If you apply by phone from outside the US, you can be issued your EIN over the phone if all your information is in order. You will also be sent a confirmation letter to your legal address.
Applying by fax takes four business days to process. A mail application is the slowest, taking around four weeks.
Common mistakes to avoid
The steps to get an EIN aren’t complicated. Apply online, and you could get your Employer Identification Number in just a few minutes. However, there are some mistakes that can delay the process—luckily, a little preparation helps you avoid them.
First, make sure that you have all the correct information. Your company should already be legally registered in your state, and you should have a business name and address that comply with IRS regulations. Also, make sure you know who the responsible party is and their SSN or ITIN.
Second, keep in mind that you are only allowed to apply for an EIN once per day. If you make a mistake and need to start the process over, you’ll have to wait until the next day. The online application times out after 15 minutes of inactivity, so make sure you have all your information close to hand so you can enter it quickly and accurately.
Another common mistake is not knowing whether you need an EIN. You need an EIN if you have employees, pay certain taxes like employment tax, or want to register a foreign company that does business in the US. Make sure you know why you are applying before you start.
Finally, once your EIN is granted, keep track of the confirmation document. Always back up your files. Print off a physical copy, and also keep a copy of the confirmation saved on secure electronic storage.
Benefits of having an IRS EIN
Many businesses are required to have an EIN. But even if the IRS doesn’t need you to have one, it can be a good idea to apply for one anyway. Here’s what an EIN gives you.
- Easier tax filing. Having this federal tax identification number helps both the IRS and state tax authorities identify your business without mistakes. This makes tax filing easier and more accurate.
- Access to banking. Banks and other lenders often require an EIN before they will open a business account for you. This makes it easier to separate personal and business finances, and also makes you look more professional.
- Protect personal information. An EIN identifies your business, not you, so using it instead of your Social Security Number for business transactions helps to protect your identity and reduce the risk of identity theft.
- Build business credit. Businesses often need to borrow money to grow, and establishing your business with an EIN early allows it to build a good credit rating and opens the door to loans and lines of credit down the line.
- Local compliance. Sometimes, state tax authorities will require you to have an EIN, even when the IRS doesn’t. Likewise, it can also simplify applying for any business licenses you may need.
Getting an IRS Employer Identification Number is easy
Having to deal with the IRS might sound intimidating, especially if it’s your first time doing it. But it’s actually quite easy to get an Employer Identification Number—and it’s something you can check off your to-do list today thanks to their handy online tool.
Having a business tax ID not only makes it easier to file taxes, it also adds professional credibility, protects your personal information, and helps you build a strong foundation for future business growth.
The fastest and easiest way to get this important tax number is by using the IRS online application tool. And if you’re applying from outside the US, you can get your EIN with a simple phone call in just a few minutes if you have your information ready. Take it from someone who’s done it: getting an EIN isn’t much harder than ordering a pizza.
Many entrepreneurs, freelancers, and small business owners take this important step every day. With a little preparation of your documents beforehand, you can apply for your EIN and secure the future of your business.
FAQs
What is the easiest way to get an IRS EIN?
The fastest and easiest way to get an IRS EIN is to apply online. The site validates your information and can issue the EIN immediately if everything is correct. Note that this service is only open to businesses based in the US, and is available from Monday to Friday, 7 AM to 10 PM Eastern time. See the step-by-step guide above to learn how to apply for an EIN online.
Will I get an Employer Identification Number with my LLC?
Not necessarily. First, you need to file your LLC with your state. They will issue a confirmation, which then allows you to apply to the IRS for a federal tax identification number or EIN.
Can I get an EIN or federal tax identification number without an LLC?
Absolutely. EINs are not just for LLCs, but can also be issued to sole proprietorships, corporations, partnerships, and nonprofits.
Do I need an EIN for my business?
You need an EIN if your company has any employees; withholds taxes on income paid to a nonresident alien; or pays employment taxes, excise taxes, or alcohol, tobacco and firearms taxes.