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Get the latest tips you need to manage your money — delivered to you biweekly. LoadingSomething is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy. An employer identification number (EIN) is a unique nine-digit number issued by the Internal Revenue Service that identifies businesses for tax purposes. It is also known as a federal tax identification number. It serves a similar purpose as a Social Security number does for an individual. Most businesses are required to get an EIN, which is free and can usually be obtained the same day you apply for one on the IRS website. Does my business need an EIN?An EIN is mandatory for most businesses, and optional for others. Businesses that meet any of the following conditions must have one:
Do I need an EIN if I'm self-employed?Businesses that don't need an EIN are those that are not required by the IRS to file taxes separately from their personal income taxes. These businesses also must not meet any of the conditions listed above. A self-employed individual acting as a sole proprietor who doesn't pay employees, for example, does not necessarily need an EIN. "However, it may still be a good idea for a sole proprietor who doesn't need to get an EIN to obtain one anyway, especially since doing so is free and easy on the IRS website," says Logan Allec, a certified public accountant and founder of the personal finance site Money Done Right. "For example, having an EIN for your business will allow you to use your EIN rather than your Social Security number when filling out Forms W-4 and W-9," Allec says. "Having an EIN can also help with being approved for a business bank account or getting a loan for your business." There are other potential benefits of obtaining an EIN as well. Business owners can use them to keep personal and business finances separate. You won't have to share your Social Security number with customers or clients for business purposes. And an EIN can help protect your personal credit score. Quick tip: An EIN can help you protect against identity theft because you can use it instead of your Social Security number on official documents. How do I get an EIN?Getting an EIN is a quick and easy process, particularly for online applicants. Any business located in the US or US territories can qualify if the applicant has a Social Security or other taxpayer identification number.
There are four ways to apply for an EIN.
Quick tip: Watch out for websites on the Internet that charge to obtain an EIN. This is a free service from the IRS, and you do not need to pay to obtain an EIN. Do I need a new EIN?If your business already has an EIN, there are some scenarios when you may need to file for a new one. In general, if your business has changed ownership or if your business has changed its structure, you will need a new EIN. Some examples of when you will need a new EIN include:
Your business doesn't need a new EIN under the following circumstances:
An EIN is a requirement for most businesses. However, you might want to consider getting one even if you don't need to. There's no cost involved, and it can help you in any number of circumstances where you can use it instead of your Social Security number. Alene Laney Alene Laney is an award-winning personal finance and real estate journalist based in the Southwest. She has written for a number of online and print outlets, including Insider, The Balance, Realtor.com, Smarter Travel, The San Juan Record and others. |