A Federal Tax ID Number Is Your Business's Identification for the IRS

A Federal Tax ID Number, also called an Employer Identification Number (EIN), is a nine-digit code the IRS assigns to identify your business for tax purposes. It works like a Social Security number, but for your company instead of a person. The IRS uses it to track your business income, payroll taxes, and other tax filings.

You may need an EIN even if you are a sole proprietor with no employees. The IRS requires one if you operate as a corporation, partnership, LLC, or nonprofit, or if you hire staff. Some sole proprietors also get an EIN to keep their personal and business finances separate, though they can use their Social Security number instead.

The number stays with your business for its lifetime. If you close the business, you do not reuse the number or reassign it to a new venture. Each new business entity gets its own EIN.

Key Takeaways

  • An EIN is a nine-digit number the IRS assigns to identify your business, and you need one if you operate as a corporation, partnership, LLC, nonprofit, or have employees.
  • Sole proprietors can use their Social Security number for taxes but may choose to get an EIN to separate personal and business finances.
  • You can request an EIN for free through the IRS website, by phone, by mail, or through a tax professional, and the process takes minutes to a few days depending on the method.
  • Banks, vendors, and contractors often ask for your EIN before opening accounts or issuing payment forms like 1099s.
  • Once assigned, an EIN belongs to that specific business entity and cannot be transferred or reused if the business closes.

Who Needs a Federal Tax ID Number

The IRS requires an EIN if your business is structured as a corporation, S-corporation, partnership, or limited liability company (LLC). Nonprofits and trusts also need one. If you have any employees—even one part-time worker—you must have an EIN to report payroll taxes.

Sole proprietors without employees can file taxes using their Social Security number. However, many sole proprietors request an EIN anyway to keep business and personal finances separate on tax forms and bank statements. This separation can make accounting simpler and may offer a small layer of privacy, since you would not have to share your Social Security number with vendors and contractors.

If you operate a business under a name different from your own (a "doing business as" or DBA), you still use your Social Security number unless your business structure requires an EIN. The DBA is a legal registration with your state or county, separate from your tax ID.

How to Request an EIN From the IRS

The fastest way to get an EIN is through the IRS website at irs.gov. Go to the "explore for an EIN" section, answer questions about your business structure, location, and the type of work you do, and you will receive your number when ready. This online method is free and takes about 15 minutes. You can print your confirmation right away.

If you prefer not to use the website, you can call the IRS at 1-800-829-4933 during business hours (Monday through Friday, 7 a.m. to 10 p.m. your local time). A representative will ask the same questions and assign you a number over the phone. This also takes 15 to 20 minutes and is free.

You can also mail Form SS-4 (process for an Employer Identification Number) to the IRS. The address depends on your state and is listed on the form itself. Processing by mail takes two to four weeks. A tax professional, accountant, or attorney can request an EIN on your behalf, though you will pay a fee for that service.

What Information You Will Need to Provide

When you request an EIN, the IRS will ask for basic details about your business. Have ready your business name, the address where your business operates, your personal name and Social Security number, and the type of business structure (sole proprietor, LLC, corporation, partnership, etc.). You will also need to describe what your business does—for example, "consulting," "retail clothing," or "construction."

If you have employees, you will need to know the date you first hired someone or plan to hire someone. If you are requesting the EIN for a new business, have the date you expect to start operations. If the business already exists, have the date it began.

The IRS may ask whether you have a bank account yet or whether you are opening one. This does not affect whether you get the EIN; they are straightforward gathering information about your business stage.

When Banks and Vendors Ask for Your EIN

Once you have an EIN, banks will ask for it when you open a business checking or savings account. Vendors, suppliers, and contractors may also request it before they do business with you. If you hire a contractor or freelancer, they will ask for your EIN so they can issue you a 1099 form at tax time (or ask for yours if you are the contractor).

Some landlords ask for an EIN before signing a commercial lease. Insurance companies may request one when you buy a business liability policy. Credit card processors and payment platforms like Square or PayPal may ask for it when you set up a merchant account.

You are not required to give out your EIN to every business that asks, but doing so is standard practice and does not create a security risk the way sharing a Social Security number does. An EIN is public information once it is assigned.

The Difference Between an EIN and a Social Security Number

Your Social Security number identifies you as a person and is used for personal income taxes, credit reports, and employment records. Your EIN identifies your business as a separate entity and is used only for business tax filings and business accounts.

A sole proprietor can use their Social Security number on business tax forms (Schedule C, filed with Form 1040). However, once you form an LLC, corporation, or partnership, you must use an EIN instead. This separation protects your personal information and makes it clear to the IRS that you are operating a formal business structure.

If you are a sole proprietor with an EIN, you still file personal income taxes using your Social Security number on your Form 1040. The EIN appears on your business tax schedules and any payroll forms you file.

What Happens if You Close Your Business

When you close your business, you do not need to "cancel" or "deactivate" your EIN in most cases. The IRS straightforward stops receiving filings from that number. However, if you had employees, you must file a final payroll tax return and notify the IRS that the business has closed. You do this by checking a box on your final Form 941 (Employer's Quarterly Federal Tax Return) or Form 944 (Employer's Annual Federal Tax Return for Agricultural Employees).

If you start a new business later, you will need a new EIN. You cannot reuse the old one, even if the new business is similar or in the same industry. Each business entity gets its own unique number.

If you sold your business to someone else, the new owner will need to explore for their own EIN. The EIN is tied to the original business structure and ownership, not to the assets or location.

Frequently Asked Questions

How long does it take to get an EIN?

The online method through irs.gov is when ready—you receive your number when ready and can print it right away. Requesting by phone takes 15 to 20 minutes and you get the number during the call. Mailing Form SS-4 takes two to four weeks. Having a tax professional request it on your behalf may take a few days depending on their workload.

Do I need an EIN if I am a sole proprietor with no employees?

No, you can use your Social Security number on your tax forms. However, many sole proprietors get an EIN anyway to keep business and personal finances separate on bank statements and to avoid sharing their Social Security number with vendors and contractors.

Is there a cost to get an EIN?

No. The IRS assigns EINs for free through their website, by phone, or by mail. If you pay a tax professional or accountant to request one on your behalf, you will pay their service fee, but the EIN itself is free.

Can I use someone else's EIN for my business?

No. Each business entity must have its own EIN. Using someone else's number is tax fraud. If you are starting a new business, you must explore for a new EIN even if you previously owned a similar business.

What if I lose my EIN or forget the number?

You can look up your EIN by calling the IRS at 1-800-829-4933 with your business name, address, and Social Security number. You can also check old tax returns, bank statements, or correspondence from the IRS—the number appears on all of these documents.