Frequently referred to as EIN, an Employer Identification Number is used to identify a business entity in the United States.
While it may seem simple on the surface, the obligation for organizations to acquire an EIN is nuanced. This is your one-stop shop for information on this type of tax identification number, read on to learn everything you need to know.
What is an Employer Identification Number?
Put simply, an Employer Identification Number (EIN) is a federal tax identification number. It is a nine-digit number unique to each business and assigned by the Internal Revenue Service (IRS) to those that require one.
EIN vs TIN
When the tax identification number is used to report employment taxes, it is referred to as an EIN. If it is used for identification instead of employment tax reporting, it is better referred to as a Taxpayer Identification Number (TIN).
EIN vs FEIN
It is important to know that an Employer Identification Number (EIN) is the same as a Federal Employment Identification Number (FEIN). There is only a difference when somebody uses “EIN” to refer to a state TIN.
Do I need an Employer Identification Number?
If you operate a registered business in the United States, you will likely need to acquire an Employer Identification Number.
If one or more of the following apply to your organization then you will need an EIN:
- The business has employees
- The business operates as a corporation
- The business files tax returns for employment, alcohol, tobacco or firearms
- The self-employed person or unincorporated small business has a Keogh plan
- The business withholds taxes on income, other than wages, to non-resident persons
How to apply for an EIN:
You can apply for an Employer Identification Number online via the IRS. The person filing the application must have a valid Taxpayer Identification Number (TIN), and the business must be located in the United States or one of its territories.
The application process must be completed in one session—you cannot leave and return later—and inactivity of over 15 minutes will require the person applying to restart the application. If you pass all validation checks, you will receive your EIN as soon as you complete the application process.
You can also apply by mail, though the processing timeframe is four weeks. International applicants can apply by telephone Monday through Friday.
Benefits of an Employer Identification Number
The main benefit of obtaining an Employer Identification Number is simply that it allows you to run your business. In most cases, you cannot begin operating without an EIN.
Acquiring an EIN is required to hire and pay employees, open bank accounts, obtain credit, file tax returns, register state taxes and more.
An additional benefit is that your business finances are separate from your personal finances, as your business is legally a separate entity. While self-employed people are not obligated to register for an EIN, some opt to do so for their own perceived benefits—such as being able to provide an identification number other than their social security number for identity protection.
How to look up an EIN
If you want to find your business’ EIN, it will be listed on a filed tax return, or you can call the IRS’ Business & Specialty Tax Line.
If you want to verify another entity’s EIN to ensure they are legitimate, you can use TINCheck.
How do I find other companies’ Employer Identification Numbers?
There are a few methods you can use to find a business entity’s Employer Identification Number, including:
- Asking the organization for it
- If they are publicly traded, searching in the SEC’s EDGAR database
- If they are exempt from tax, i.e. a charity, then you can look up online via the IRS
EIN Exemptions
There are certain businesses that are exempt from requiring an Employer Identification Number. If none of the following apply to your organization then you may not need an EIN:
- The business has employees
- The business operates as a corporation
- The business files tax returns for employment, alcohol, tobacco or firearms
- The self-employed person or unincorporated small business has a Keogh plan
- The business withholds taxes on income, other than wages, to non-resident persons
How to Verify an EIN
Looking to safeguard your business by verifying the identity and information of customers and vendors? TINCheck, Powered by Sovos allows you to look up Employer Identification Numbers in government databases and watchlists in seconds to confirm legitimacy.
With TINCheck, you can reduce the risk of regulatory penalties associated with transactions conducted with unverified individuals and businesses.
Other Taxpayer Identification Numbers
There are several types of Taxpayer Identification Numbers (TIN) that the IRS issues to taxpayers. Besides EIN, these are:
- SSN: Social Security Number
- ITIN: Individual taxpayer identification number
- ATIN: Adoption taxpayer identification number
- PTIN: Preparer tax identification number (PTIN)
- Foreign Persons and IRS Employer Identification Numbers
FAQ
What is the purpose of an Employer Identification Number? An Employer Identification Number (EIN) allows the IRS to identify businesses for tax purposes. Businesses each have a unique nine-digit number.
How long will it take to get an EIN? You can receive an EIN immediately when applying online. Those who prefer to fax can expect to receive an EIN in one week if they have a return fax number or two weeks without.
How do I find an Employer Identification Number? Employer Identification Numbers can be found on tax returns. Calling the IRS is advised if further help is needed.
Does every business need an EIN? Taxpayers that find one or more of the following as applicable must obtain an Employer Identification Number:
- The business has employees
- The business operates as a corporation
- The business files tax returns for employment, alcohol, tobacco or firearms
- The self-employed person or unincorporated small business has a Keogh plan
- The business withholds taxes on income, other than wages, to non-resident persons
Do I need to change my EIN? Generally, a new EIN is required when a business makes ownership changes. There are further reasons a EIN change may be necessary:
- Sole proprietors must obtain a new EIN when incorporating or starting to operate as a partner.
- Corporations must obtain a new EIN when receiving a new charter from the secretary of state, becoming a subsidiary of a corporation, changing to a partnership or sole proprietorship, or creating a new corporation via merger.
- Partnerships must obtain a new EIN when incorporating, if the partnership is taken over by one of the partners and becomes a sole proprietorship or when you end the partnership to begin another.
What if I lose my EIN? The easiest way to relocate your EIN is to find a tax return you have filed. Alternatively, calling the IRS may help.
Is a business tax ID number the same as an EIN? Yes, an Employer Identification Number is a business tax ID number.
Can I have a business without an Employer Identification Number? There are certain businesses that are not required to have an Employer Identification Number. Your business will need an EIN if it meets the following criteria:
- The business has employees
- The business operates as a corporation
- The business files tax returns for employment, alcohol, tobacco or firearms
- The self-employed person or unincorporated small business has a Keogh plan
- The business withholds taxes on income, other than wages, to non-resident persons
If those do not apply, your business may not need an EIN.
Start validating EINs today with TINCheck. Get started with one free check.