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Employer Identification Number (EIN)


The Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States for identification purposes. Similar to a Social Security Number for individuals, the EIN is used by the IRS to track a company’s tax obligations. It’s necessary for various business needs such as hiring employees, opening a bank account, and filing tax returns.


The phonetics for Employer Identification Number (EIN) is:Employer – /ɪmˈplɔɪ.ɚ/Identification – /aɪˌdɛntɪfɪˈkeɪʃən/Number – /ˈnʌmbər/EIN – /iː aɪ ɛn/

Key Takeaways

  1. An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses for tax purposes. It’s often referred to as an FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
  2. Not every business requires an EIN. Sole proprietors, for example, can operate without an EIN. However, if the business hires employees, has a Keogh plan, operates as a partnership or corporation, etc., obtaining an EIN is mandatory.
  3. The EIN is used by the IRS for identification and it doesn’t expire. Once an EIN has been assigned to a business entity, it cannot be used by another business. If a business changes its business name, location or adds locations, the EIN does not need to be changed. The process to apply for an EIN is free of charge from the IRS.


The Employer Identification Number (EIN) is important because it essentially serves as a Social Security number for a business entity. This unique nine-digit number assigned by the Internal Revenue Service (IRS) is used by the federal government to identify businesses for taxation purposes. Companies need an EIN to pay employees, open bank accounts, apply for business licenses, and file tax returns. Moreover, it is required when seeking eligible business contracts, filing electronic tax returns and statements, and in order to comply with IRS tax reporting obligations. Notably, this identifier is also essential during interactions with other businesses, for example, when reporting information about independent contractors. Essentially, an EIN supports the efficient organization, identification, and lawful operation of businesses across the U.S. economy.


An Employer Identification Number (EIN), often referred to as a tax ID number, is a unique identifier assigned to businesses by the Internal Revenue Service (IRS). Its main purpose is to identify and regulate the tax account of a business entity, effectively serving the same role as a social security number, but for businesses instead of individuals. As such, it plays a vital role in the administration of tax laws in the United States and is crucial for every business. Beyond tax purposes, an EIN is also utilized in various business-related functions. It is required when applying for business licenses, opening a bank or financial account under the business name, or establishing credit for the business. If a business opts to hire employees, the EIN is necessary for reporting employment taxes. It is also used in the filing of electronic returns and statements and in the dealing of documents with the IRS and Social Security Administration. Indeed, an EIN is pivotal to the smooth operation of businesses, concurrently enabling them to abide by federal tax obligations.


1. Starting a Business: Consider the case of John, who is looking to start his own restaurant in New York. As he plans to hire employees, he will need to apply for an Employer Identification Number (EIN) from the IRS. This unique nine-digit number is used to identify John’s restaurant for tax purposes and enables the IRS to track his business’s tax reporting. 2. Opening a Business Bank Account: Lisa, the owner of a boutique fitness studio, wants to open a bank account for her business. The bank informs her that since the account will be in the name of her business, she will need to provide an EIN. Her EIN identifies her business for tax purposes and is also used by banks to follow federal regulations related to money laundering. 3. Filling Out W-9 Forms: An independent contractor named Alex is hired by a technology company for a six-month project. For tax reporting purposes, the company requires Alex to fill out a W-9 form, which includes providing an EIN if Alex operates his freelance business as a corporation or partnership, rather than as a sole proprietor.

Frequently Asked Questions(FAQ)

What is an Employer Identification Number (EIN)?
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS). This number is used to identify businesses for tax purposes and is often required when applying for business licenses or opening a business bank account.
Who needs an EIN?
An EIN is needed by business entities such as corporations, partnerships, and LLCs, as well as trusts and estates, non-profit organizations, farmers’ cooperatives, and plan administrators.
How can a business obtain an EIN?
A business can obtain an EIN by submitting Form SS-4 to the IRS. This can be done online, by fax, mail, or telephone. The online method is the preferred and fastest way to apply.
Is there a cost to apply for an EIN?
No, there is no cost to apply for an EIN. It is a free service provided by the IRS.
Can I use my Social Security number (SSN) instead of an EIN?
While sole proprietors without employees may use their SSN for tax purposes, it is generally recommended to get an EIN to protect against identity theft.
What information do I need to apply for an EIN?
When applying for an EIN, you need to provide information such as the legal name of the entity, the person responsible, the mailing address, the type of entity, and descriptions of your activities and products/services.
How long does it take to receive an EIN?
If you apply for an EIN online, you will typically receive the number immediately after the IRS verifies your information. If applied by fax, it usually takes about four business days; via mail, it could take up to four weeks.
Can a business have more than one EIN?
No, a business entity is generally allowed to have only one EIN. However, if a business changes its legal structure (e.g., from a sole proprietorship to a corporation), it will need to obtain a new EIN.
What if I lose or forget my EIN?
If you lose or forget your EIN, you can contact the IRS. They can verify your identity and provide the number to you.
: Does an EIN expire?
No, an EIN does not expire. Once an EIN has been issued to an entity, it will not be reissued.

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