If you’re starting a business, hiring employees, or need to file certain tax returns, you may be required to obtain an Employer Identification Number (EIN) from the IRS. Here’s what you should know:

What is EIN?

An Employer Identification Number (EIN) is a unique nine-digit number issued by the IRS to identify a business for tax purposes. It works like a Social Security number but is specifically for businesses.

Typically, a business keeps the same EIN, but significant changes, such as restructuring from a sole proprietorship to a corporation, may require applying for a new one.

Who Must Apply for an EIN?

General Requirements –

You need an EIN if:

  • You have employees.
  • You pay specific federal taxes, such as employment, excise, or alcohol, tobacco, and firearms taxes.
  • You withhold taxes on income (other than wages) paid to a non-resident alien.

Even if not required federally, you can still get an EIN for:

  • Opening a business bank account.
  • State tax filings or compliance.

Businesses and Entities That Require an EIN:

S.-Based Businesses
Most U.S.-based businesses need an EIN for tax and legal purposes, including:

    • Sole proprietorships (if they have employees or file excise taxes).
    • Partnerships (mandatory for filing partnership tax returns).
    • Limited Liability Companies (LLCs).
    • Nonprofits and tax-exempt organizations.

Foreign-Based Businesses
Foreign businesses conducting business in the U.S. need an EIN if they:

    • Have U.S.-based employees.
    • Operate as a partnership, corporation, or LLC in the U.S.
    • Engage in a trade or business within the U.S.

Estates and Trusts

    • Estates need an EIN to manage and distribute assets after someone passes away.
    • Trusts, normally need an EIN, except certain grantor-owned revocable trusts.

 Retirement Plans and Specialized Entities

    • Retirement plans or Individual Retirement Accounts (IRAs).
    • Real estate mortgage investment conduits.
    • Farmers’ cooperatives.

 

What is the Impact if a Business does not have an EIN?

Operating a business without an EIN can cause problems, such as:

  • Penalties and Tax Return Delays: Without an EIN, your tax returns may be delayed, and you could face fines for not filing required forms or paying taxes on time.
  • Hiring Employees: You can’t legally hire employees or handle payroll and taxes properly because the EIN is used for both.
  • Foreign Business Issues: Foreign businesses operating in the U.S. may struggle with tax filing and compliance without an EIN.
  • Licenses and Permits: Many states and local governments require an EIN to issue business licenses or permits.

How to apply EIN?

 

For businesses located in the U.S.:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

Your EIN should arrive in about 4 weeks.

 

For businesses located outside the U.S. (International applicants):

  • By phone: Call 267-941-1099 between 6 a.m. and 11 p.m. Eastern Time, Monday through Friday.
  • By fax: Fax Form SS-4 to:

855-215-1627 (within the U.S.) or 304-707-9471 (outside the U.S.).

  • By mail: Mail Form SS-4 to:

Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999

 

Note: You can only apply for one EIN per day, whether you apply online, by phone, fax, or mail.

 

You may also refer to the below IRS website articles for further information:

 

Disclaimer: This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors or consult us regarding your own personal tax situation as this article was intended to be general in nature.