What Is an EIN and Does Your Business Need One?
An EIN (Employer Identification Number) is like a Social Security number for your business. Here's what it is, who needs one, and how to get it for free.
An Employer Identification Number (EIN) is a nine-digit number assigned by the IRS to identify your business for tax purposes. Think of it as your business's Social Security number.
Who Needs an EIN?
You need an EIN if your business:
- Has employees (or plans to hire)
- Operates as a partnership, corporation, or multi-member LLC
- Files certain tax returns (excise, employment, alcohol/tobacco/firearms)
- Withholds taxes on income paid to a non-resident alien
- Has a Keogh plan
Even if you don't technically need one, getting an EIN is strongly recommended for any business. Here's why:
- Open a business bank account — Most banks require an EIN for business accounts
- Protect your SSN — Use your EIN instead of your Social Security number on business documents and 1099s
- Build business credit — An EIN is the foundation of your business credit profile
- Hire contractors — You'll need it to issue 1099s, and professional bookkeeping services can help keep those payments organized.
How to Get an EIN
Apply online at irs.gov/ein. The process takes about 10 minutes and you receive your EIN immediately. It's completely free — don't pay a third-party service to do this for you.
What you'll need:
- Your Social Security number (or ITIN)
- Your business's legal name and address
- The type of entity (LLC, sole proprietor, corporation, etc.)
- The reason you're applying
EIN vs. SSN on Business Documents
Once you have an EIN, use it — not your SSN — on all business documents, contracts, and tax forms. This reduces the risk of identity theft and keeps your business and personal finances properly separated.
What If You Already Have an EIN?
You generally keep the same EIN for the life of your business. You may need a new EIN if you change your business structure (e.g., converting from a sole proprietorship to a corporation).
Once you have your EIN, the next step is opening a dedicated business bank account to keep your finances properly separated.
Related Resources
- Remote Bookkeeping Services for Small Businesses
- How to Open a Business Bank Account for Your LLC
- What to Do After Forming Your LLC: A Post-Formation Checklist
- How to Form an LLC in Texas: Step-by-Step Guide
- LLC Bookkeeping: What Every Owner Needs to Know
- Contact Us
Forming an LLC and need help getting set up? The Gap ProAdvisors handles LLC formation including state filing, EIN, and optional S-Corp election for a flat $700. Pay now or contact us.
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About the author
The Gap ProAdvisorsOwner & Lead Advisor — The Gap ProAdvisors
Angela is a Certified Bookkeeper, QuickBooks ProAdvisor, and IRS Registered Tax Return Preparer (PTIN) with over a decade of experience helping small businesses across Texas get their books right and keep more of what they earn. She founded The Gap ProAdvisors to make professional financial services accessible to every small business owner — no matter where they are.