An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number that the IRS assigns to business entities. The IRS uses this number to identify taxpayers who must file various business tax returns.
Employers, sole proprietors, corporations, partnerships, nonprofits, trusts and estates, government agencies, and other business entities use EINs.
If you’re starting a business or handling business taxes, you may encounter several terms, including EIN, Federal Tax ID, and Tax ID Number. People often use these terms interchangeably, but some distinctions are worth understanding.
In most business-related situations, an EIN and a Federal Tax ID are the same thing. EIN stands for Employer Identification Number, and it is the federal tax identification number the IRS assigns to businesses and other entities.
However, Tax Identification Number (TIN) is a broader term. It refers to several types of identification numbers the IRS uses to identify taxpayers. An EIN is one type of TIN, but not every TIN is an EIN.
For example, individuals generally use a Social Security Number (SSN) as their taxpayer identification number. Some individuals who are not eligible for an SSN may use an Individual Taxpayer Identification Number (ITIN).
The IRS recognizes several types of taxpayer identification numbers, including:
You can find additional information about these identification numbers in the IRS’s Taxpayer Identification Numbers guide.
If you’re a sole proprietor (with no employees) and are not incorporated, you generally don’t need a separate Federal Tax ID Number (FEIN). You can usually use your Social Security Number instead. However, if you’re incorporated, operate a partnership, or have employees, you generally need an EIN.
Some sole proprietors also choose to obtain an EIN for business banking, state tax requirements, or to avoid using their Social Security Number for business transactions.
The IRS provides more information about who needs an EIN.
If you become the new owner of an existing business, do not automatically use the EIN of the former owner. The EIN generally belongs to the business entity, not the individual operating it. Whether you need a new EIN depends on how the business is structured and how ownership changes.
If you acquire the stock of an existing corporation, for example, you generally continue using the corporation’s existing EIN.
If you already have an EIN, you may need to get a new one if the organization or ownership of your business changes.
For example, if you incorporate a sole proprietorship or form a partnership, you generally must get a new EIN. You should also understand the applicable corporate tax filing requirements for your new business structure. However, you typically do not need a new EIN if:
The requirements vary depending on the business structure. The IRS provides additional guidance on when to get a new EIN.
If you are electing to be an S corporation, be sure to file Form 2553, Election by a Small Business Corporation.
For additional information about state-level obligations, see this guide to state filing requirements for S-corps and C-corps.
File only one Form SS-4, regardless of the number of businesses operated or trade names under which a business operates, when those businesses belong to the same entity. However, each corporation in an affiliated group generally must have a separate EIN.
An EIN is for use in connection with your business activities only. Do not use your EIN in place of your Social Security Number (SSN) when an individual taxpayer identification number is required.
Your business structure also affects your federal tax filing obligations. See Aptora’s guide to corporate tax filing requirements for more information.
You can apply for an EIN directly through the IRS. There is no application fee.
The easiest way to get an EIN is to apply online through the IRS. If approved, the IRS issues your EIN immediately.
Be cautious of third-party websites that charge fees to obtain an EIN. You can complete the application yourself for free.
If you prefer not to apply online, you can download IRS Form SS-4, Application for Employer Identification Number, and submit it by mail or fax according to the IRS instructions.
For additional information about business tax requirements, the U.S. Small Business Administration’s guide to launching a business is also a helpful resource.
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number that the IRS assigns to business entities. The
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