What Is an EIN and When Does Your Business Need One?
An Employer Identification Number (EIN) is a nine-digit number issued by the IRS to identify your business for tax purposes. Think of it as a Social Security number for your company.
When do you need an EIN?
You’ll need an EIN if your business:
- Hires employees
- Operates as a corporation or partnership
- Withholds taxes on income paid to a non-resident
- Has a Keogh retirement plan
- Is involved with trusts, estates, or certain types of nonprofits
Even if you’re a sole proprietor with no employees, you may still want an EIN to separate your personal and business finances or to open a business bank account.
How do you apply?
It’s free and fast. You’ll get your number immediately upon completion if you apply online during IRS business hours.
Why it matters
Many financial institutions and vendors require an EIN before working with your business. It also protects your SSN from being exposed on tax or banking forms.
Bottom Line
If you’re starting a business or scaling operations, getting an EIN is a basic but critical step. It only takes a few minutes but sets the foundation for hiring, tax filing, and compliance.
