What Is an EIN and How Do You Get One?

An EIN, or Employer Identification Number, is a nine-digit federal tax ID the IRS assigns to your business, much like a Social Security number identifies a person. So when people ask "what is an EIN," the short answer is this: it is a free number from the IRS that identifies your business for tax filings, bank accounts, payroll, and other official paperwork. Any US business owner can apply directly with the IRS in minutes at no cost.

What is an EIN, exactly?

Think of an EIN as your business's version of a Social Security number. The IRS uses it to track your company's tax activity, and banks, payroll providers, and vendors use it to verify your business is real. It is sometimes called a Federal Tax Identification Number, but EIN and Federal Tax ID mean the same thing. The number stays with your business for its lifetime, even if you change your address or business name.

Who needs an EIN?

The IRS requires an EIN in several common situations. You generally need one if any of the following apply:

You have employees, or plan to hire soon.
Your business is structured as a corporation or a partnership.
You have a multi-member LLC.
You file certain excise tax returns, or you have a Keogh or solo 401(k) retirement plan.
You withhold taxes on income paid to a non-resident.

If you are a sole proprietor with no employees, the IRS does not strictly require an EIN. You can legally use your own Social Security number instead. But that does not mean you should, and here is why.

Why get an EIN even as a solo owner?

Plenty of one-person businesses apply for an EIN by choice, and it is usually a smart move. There are four practical reasons worth knowing.

Banking

Most banks ask for an EIN before they will let you open a business bank account. Keeping business and personal money separate makes bookkeeping cleaner, looks more professional, and helps protect your personal liability shield if you form an LLC or corporation.

Hiring

The moment you decide to hire your first employee, an EIN becomes mandatory. It is the number you use to report wages, run payroll, and submit employment taxes. Having one already in place removes a step when you are ready to grow.

Taxes and paperwork

An EIN simplifies tax filing and is often requested when you apply for business licenses, set up a merchant account, or fill out a W-9 for a client. Many vendors and platforms simply expect one.

Keeping your SSN private

This is the reason many solo owners overlook. Without an EIN, you hand out your Social Security number every time a client needs a W-9. Using an EIN instead keeps your personal SSN off those forms, which lowers your exposure to identity theft.

Tip: If you are still deciding on your business structure, apply for the EIN after you register your business with your state. Your EIN should match your official legal entity, so the order matters.

How do you get an EIN for free?

You can get an EIN directly from the IRS, for free, in about fifteen minutes. Here is the straightforward path:

Go to the official IRS website at IRS.gov and search for "apply for an EIN online." Confirm the address ends in .gov before you enter anything.
Choose your business structure, such as sole proprietor, LLC, corporation, or partnership.
Enter the details of the responsible party, which is usually the owner, including their name and Social Security number or ITIN.
Provide basic business information, like your legal name, mailing address, and the reason you are applying.
Submit the application. If you apply online during IRS business hours, your EIN is issued immediately, and you can download the confirmation letter right away.

The online application is available to businesses whose principal location is in the United States or US territories. If you prefer, you can also apply by mail or fax using Form SS-4, though those methods take longer.

Watch out for sites that charge for an EIN

Getting an EIN is always free through the IRS. Many third-party websites present themselves as "EIN application services" and charge anywhere from $50 to $300 for something the government provides at no cost. They are not the IRS, and they cannot get you anything you cannot get yourself in a few minutes. Before you submit any application, make sure you are on the official IRS.gov site. If a page is asking for payment to issue your EIN, close it.

Is an EIN the same as an SSN or ITIN?

No. All three are tax identification numbers, but they serve different purposes:

SSN (Social Security Number) identifies an individual person for Social Security and personal taxes.
ITIN (Individual Taxpayer Identification Number) is a tax ID for individuals who need to file US taxes but are not eligible for an SSN.
EIN (Employer Identification Number) identifies a business entity, not a person.

You may actually use your SSN or ITIN when you apply for your EIN, since the IRS wants to know the responsible individual behind the business. But once issued, the EIN is your business's own identifier.

Frequently asked questions

Does an EIN cost anything?

No. Applying for an EIN directly through the IRS is completely free. Any site that charges a fee to obtain one is a third-party service, not the government.

How long does it take to get an EIN?

If you apply online through IRS.gov during business hours, you usually receive your EIN immediately. Mail or fax applications using Form SS-4 take several days to a few weeks.

Can I use one EIN for two businesses?

Generally, no. Each separate legal business entity needs its own EIN. If you run two distinct businesses under different structures, plan on applying for a separate number for each.

This article is general information, not legal or tax advice. For guidance specific to your situation, consult a qualified professional.

Figuring out when to get your EIN, and what comes before and after it, is exactly the kind of thing Scafflow keeps in order. Scafflow gives first-time US owners a personalized, step-by-step launch checklist across legal, finance, brand, website, and more, so nothing important slips through the cracks.

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