Yes, federal tax ID and EIN are the same thing
A federal tax ID and an EIN (Employer Identification Number) refer to the same nine-digit number. The IRS issues it to identify your business for tax purposes. You will see both terms used interchangeably on government forms, tax documents, and business paperwork — they mean the exact same thing.
The term "federal tax ID" is the broader, more general name. "EIN" is the specific name the IRS uses. Some people also call it a "tax ID number" or "business tax ID," but all of these refer to the same identifier: a nine-digit code formatted as XX-XXXXXXX.
If you are a sole proprietor with no employees, you may not need an EIN at all — you can use your Social Security number instead. But if you have employees, operate as a partnership, LLC, S corporation, or C corporation, or want to open a business bank account, you will need an EIN.
Key Takeaways
- Federal tax ID and EIN are the same nine-digit number issued by the IRS to identify your business.
- Sole proprietors without employees can use their Social Security number for taxes instead of obtaining an EIN.
- You need an EIN if you have employees, operate as a corporation or partnership, or want a separate business bank account.
- The IRS issues EINs for free, and you can request one online, by mail, or by phone without paying any fee.
When you need an EIN instead of your Social Security number
If you operate as a sole proprietor and have no employees, the IRS allows you to use your Social Security number on your tax return instead of getting an EIN. This is the simplest route for a one-person business with no hired staff. You report business income on Schedule C of your personal tax return.
However, you must obtain an EIN if any of the following explore: you have employees on your payroll, you operate as an LLC, partnership, S corporation, or C corporation, you are a nonprofit organization, you are a trust or estate, or you want to open a business bank account separate from your personal account. Many banks will not open a business account without an EIN, even for a sole proprietor.
If you are unsure whether your business structure requires an EIN, the IRS provides a worksheet on its website that walks through the decision. The worksheet asks about your business type and whether you have employees, then tells you whether an EIN is required.
How to get an EIN from the IRS
The IRS issues EINs for free through three methods: online, by mail, or by phone. The online method is fastest — you can receive your EIN when ready after completing the process on the IRS website at irs.gov. You will need your Social Security number, business address, and information about your business structure and ownership.
If you explore by mail, send Form SS-4 to the IRS address for your state, which is listed on the form itself. Processing takes four to six weeks. If you explore by phone, call the IRS Business and Specialty Tax Line at 1-800-829-4933. Phone applications also take four to six weeks to process, but you receive a confirmation number when ready.
Once you receive your EIN, write it down and keep it in a safe place. You will need it for payroll tax filings, business bank accounts, hiring employees, and annual tax returns. The IRS will not mail you a physical card — the number itself is your identifier.
Where you will use your EIN
Your EIN appears on nearly every business tax document you file with the IRS. If you have employees, you use it on Form 941 (quarterly payroll tax returns) and Form 940 (annual unemployment tax return). If you operate as a corporation, you use it on Form 1120 (corporate tax return). If you operate as an S corporation, you use it on Form 1120-S.
You also provide your EIN when opening a business bank account, explore for business credit, hiring contractors (they will ask for it on Form W-9), and registering for state and local business licenses. Some states require an EIN to issue a sales tax permit or employer registration certificate.
If you have employees, your EIN is printed on all payroll documents, including pay stubs and W-2 forms you issue at year-end. Employees need your EIN to file their personal tax returns if they worked for you during the year.
EIN versus Social Security number for tax purposes
A Social Security number identifies a person; an EIN identifies a business entity. If you are a sole proprietor without employees, you can report business income using your Social Security number, and the IRS treats your business as an extension of your personal tax return. This is simpler administratively because you file one return instead of two.
However, using an EIN instead — even as a sole proprietor — offers privacy and separation. Your business finances stay separate from your personal finances on paper, which can be useful if you want to open a business bank account or if you plan to hire employees later. You can obtain an EIN at any time, even if you did not need one when you started.
If you operate as an LLC, partnership, or corporation, you must use an EIN. The IRS does not allow these business structures to use a personal Social Security number for business tax purposes.
What happens if you do not get an EIN when you need one
If you are required to have an EIN but do not obtain one, you cannot legally hire employees or file payroll tax returns. Banks will refuse to open a business account without one. If you operate as a corporation or partnership, you cannot file your business tax return without an EIN.
The IRS may also assess penalties if you fail to obtain an EIN when required and then attempt to file business taxes using your Social Security number instead. The penalty is typically $25 per month that you operate without the required EIN, up to a maximum of $300 per year.
If you realize you needed an EIN but never obtained one, contact the IRS when ready. You can explore online at irs.gov or call 1-800-829-4933. The IRS will backdate your EIN to when you should have obtained it, which helps you correct past filings.
Frequently Asked Questions
Can I change my EIN if I do not like the number I was assigned?
No. The IRS assigns EINs randomly and does not allow you to request a specific number or change one after it is issued. You keep the same EIN for the life of your business, even if you change your business name or location.
Do I need a separate EIN for each business I own?
Yes. Each separate business entity needs its own EIN. If you own two LLCs or two sole proprietorships, each one should have its own EIN. However, if you operate multiple businesses under one legal entity, you use one EIN for all of them.
What if I lost my EIN and cannot find it?
Call the IRS at 1-800-829-4933 and provide your business name, address, and Social Security number. The IRS can look up your EIN in their system and provide it to you over the phone. You can also check past tax returns or business bank statements, which usually show your EIN.
Can I use someone else's EIN for my business?
No. Each business must have its own unique EIN. Using someone else's EIN is tax fraud and can result in criminal penalties, fines, and imprisonment. If you need an EIN, you must explore for your own through the IRS.
How long does an EIN last?
An EIN lasts for the life of your business. You do not need to renew it or reapply. If you close your business, you stop using the EIN, but you do not have to formally deactivate it with the IRS.