What is an EIN Number and Do I Need It?

EIN stands for Employer Identification Number. An EIN Number is the federal Tax Identification Number for your business. It operates much in the same way your Social Security Number operates in your personal life; it allows the government to quickly identify your business and provides a specific account for you to file your business taxes.

When you file for an EIN Number, it is tied to one person’s social security number or ITIN Number. Even if there are multiple owners of the company, one must be chosen to be associated with the EIN Number. The IRS does not charge a fee for issuing an EIN Number.

If you paper file for an EIN number it takes the IRS about 7 business days to process and send you a return letter with your EIN Number. If you file your EIN Number on the IRS’ online system, you will receive your EIN Number immediately.

If you have an LLC or other corporation, you ARE required to have an EIN Number as well. Also depending on your authority type, you may be required to have an EIN Number to complete the filings, such as a 2290. If you have a Sole Proprietorship, you are not required to have an EIN Number (unless required by your authority type), but it is highly recommended as a measure to keep your personal Social Security Number private.

Since an EIN Number is issued in the name of your company, you should register your company name before applying for an EIN Number to ensure it will be issued in the correct company name. The IRS will not check whether your company name is valid with your state before issuing your EIN Number, and changing the name on your EIN Number after it is issued can be difficult and time consuming.