An Employer Identification Number (EIN) is a unique nine-digit number the IRS assigns to businesses for tax purposes. An EIN allows the IRS to identify businesses for tax reporting and other requirements. Businesses can apply for an EIN directly through the IRS, which typically issues them immediately. In addition to reporting taxes, an EIN can be used to open business bank accounts and apply for business credit. Once assigned an EIN, a business keeps that EIN even if it closes temporarily.
Do You Need an EIN?
You may not need an EIN, depending on your business type. However, even sole small business owners often find EINs beneficial. EINs provide some protection and privacy from identity theft dangers nowadays.
Handling Inactive EINs
An EIN becomes the permanent federal taxpayer identification number for that business once assigned. There is no cost to apply. An EIN cannot be reused or reassigned to another organization. Even if never used for returns or documents, the IRS cannot cancel an EIN.
If you determine an EIN is no longer needed after receiving it, you can request the IRS close the account. This may apply if the business never operated. You can still use the EIN later if necessary, as it will always belong to that business. The number simply becomes “inactive.” You can write to the IRS to close the account.