Do I Need an EIN?
An Employer Identification Number (EIN) identifies your business for tax purposes. You likely need an EIN if: you operate a partnership, have employees, file certain tax returns, withhold taxes paid outside the country, have a retirement plan, or are involved with an estate, trust or real estate investment.
Applying for an EIN
Applying for an EIN is free and quick through the IRS. When applying, provide the legal business name and address. An EIN enables some actions needing a Social Security number and tax filing.
EIN for Business Entities
- Sole proprietors can use their Social Security number. But an EIN opens business bank accounts or applies for loans.
- Single-member LLCs can use their Social Security number if no employees and taxes paid as a sole proprietorship. However, an EIN provides security against identity theft.
- Multi-member LLCs get their own EIN. The IRS treats them as partnerships unless incorporated. Partnerships require an EIN by law regardless of employees.
While an EIN identifies your business to the IRS, most US businesses need one. There are exceptions. But even if not required, there are benefits in having an EIN that helps growth and success.