EIN: What Is It and Why Do I Need One?
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An Employer Identification Number (EIN), also called a Federal Employer Identification Number (FEIN) or federal tax ID, is a unique nine-digit number (formatted XX-XXXXXXX) assigned by the IRS to identify businesses for federal tax purposes. Most businesses, including LLCs, corporations, and nonprofits, need an EIN to file taxes, hire employees, and open a business bank account.
Whether you are launching a new LLC, taking on your first employee, or opening a business checking account, understanding your EIN is one of the first practical steps in running a legitimate business. This guide explains what an EIN number is, which businesses and entities need one, how to apply in four straightforward steps, and what to do if you need to look up or eventually close an EIN.
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Get StartedTable of Contents
What Is an EIN Number?
An EIN number is a nine-digit federal tax identification number issued by the IRS, formatted as XX-XXXXXXX, used to identify a business entity for tax and banking purposes. Think of it as a Social Security Number (SSN) for your business — it uniquely identifies your company to the federal government and to financial institutions.
Key facts about EINs:
- A unique nine-digit number assigned by the Internal Revenue Service (IRS)
- Used for federal tax filings, payroll tax reporting, and opening a business bank account
- Different from your state tax ID, which is issued separately by your state's revenue agency
- One EIN is issued per business entity — not per owner or location
- Permanent for the life of the entity; EINs do not expire
The IRS also uses the term FEIN (Federal Employer Identification Number) and federal tax ID interchangeably with EIN. All three refer to the same number. The responsible party, the individual who controls, manages, or directs the entity and its funds, must provide their SSN or Individual Taxpayer Identification Number (ITIN) on the EIN application.
One important privacy advantage: once you obtain an EIN, you can use it in place of your personal SSN on business documents, contracts, and tax forms, reducing your exposure to identity theft.
Who Needs an EIN?
Most businesses and many other legal entities in the United States are required to obtain an EIN. The requirement depends on your entity type, whether you have employees, and how your business is structured for tax purposes. Below is a breakdown by the most common entity types.
LLCs
If your LLC has more than one member or has any employees, it may be required to obtain an EIN. Multi-member LLCs are treated as partnerships for federal tax purposes by default and need an EIN to file their tax return (Form 1065).
Single-member LLCs without employees are technically permitted to use the owner's SSN for federal tax purposes, but most banking institutions and many vendors will still ask for an EIN. Getting one protects your personal Social Security Number and makes your business easier to work with professionally. If your single-member LLC elects to be taxed as a corporation, an EIN is required regardless.
Start your LLC today and include your EIN retrieval as an add-on.
Sole Proprietors
Most sole proprietors are not required to obtain an EIN, but getting one can protect your Social Security Number and make your business appear more credible to clients and banks.
A sole proprietor usually needs an EIN in any of the following situations:
- You hire one or more employees
- You file for bankruptcy
- You establish a Keogh or solo 401(k) retirement plan
- You have a qualified pension, profit-sharing, or retirement plan
- You file excise tax returns (alcohol, tobacco, firearms)
If none of these apply, you can use your SSN, but an EIN is easy to obtain and adds a meaningful layer of identity protection.
Corporations and Partnerships
Corporations and partnerships are legally separate entities responsible for their own tax obligations and should obtain an EIN from the start. This applies to C corporations, S corporations, and all partnership structures (general, limited, limited liability).
An existing corporation may also need a new EIN when it undergoes major structural changes, such as incorporating in a different state or merging with another entity. Changing your corporate name or address alone generally does not require a new EIN.
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Trusts, Estates, and Other Entities
The following entities also may need to obtain an EIN regardless of whether they have employees:
| Entity Type | Needs EIN? | Notes |
|---|---|---|
| Irrevocable Tust | Yes | Obtained after grantor's death or upon trust creation |
| Probate Estate | Yes | Needed when filing a Form 1041 (income tax return) |
| Employee Benefit Plan | Yes | Pension, profit sharing, or retirement plan |
| Nonprofit/501(c)(3) | Yes | Needed before applying for tax-exempt status |
| Personal Service Corporation | Yes | Treated as a separate taxable entity |
| Household Employer | Yes | Generally needed when paying household workers |
| Bankruptcy Estate | Yes | Needed for Chapter 7 or 11 filings |
A common point of confusion: people often ask whether an EIN is the same as a tax ID number. An EIN is a type of tax ID number — specifically, the federal-level identifier for business entities. Your state tax ID is a separate number, issued by your state's department of revenue or taxation, required for collecting sales tax or filing state payroll taxes. You may need both.
How to Apply for an EIN (4 Steps)
Applying for an EIN takes as little as 15 minutes online and LegalNature can handle the entire process for you. Here is how the application works from start to finish.
There are four steps to obtain an EIN:
- Determine your entity type and eligibility. Confirm whether your business structure — LLC, corporation, sole proprietorship, trust, partnership, nonprofit, or other entity — qualifies for and requires an EIN. Your entity must be located in the United States or a U.S. territory, and the responsible party (the person completing the application) must have a valid SSN or ITIN.
- Gather your required information. Before starting the application, collect everything listed in the checklist in the next section.
- Submit your EIN application. Apply for your EIN through LegalNature and let our team handle the submission accurately and efficiently.
- Receive your EIN. Online applicants receive their EIN immediately upon completion and we will send it to you as soon as we complete your order. Once issued, your EIN is permanent — keep it in a secure location alongside your business formation documents.
Information Needed to Apply for an EIN
Before starting your EIN application, gather the following information:
- Legal business name — and your trade name (DBA) if different from your legal name
- Responsible party name and SSN or ITIN — the person who controls the entity's finances and operations
- Business address — a physical street address is required. A P.O. box is only accepted as a mailing address (if any).
- Entity type — LLC, corporation, sole proprietorship, partnership, trust, estate, etc.
- Reason for applying — new business, hired employees, banking requirement, compliance, etc.
- Closing month of your accounting year — typically December for calendar-year filers
- Number of employees expected in the next 12 months — used to determine payroll tax filing frequency
- Principal business activity — brief description of what your business does and the principal product or service
When Is an EIN Not Required and Why Get One Anyway?
Most sole proprietors and single-member LLCs without employees can legally use their SSN for business taxes, but obtaining an EIN anyway protects your identity and adds professional credibility.
Using your SSN for business purposes exposes it every time you complete a vendor form, open a business account, or file a 1099. An EIN lets you keep your SSN private while fulfilling the same federal identification function.
Additional reasons to obtain an EIN even when not required:
- Most banks require an EIN to open a business checking or savings account.
- Many vendors, clients, and platforms request an EIN before payment or onboarding.
- Having an EIN separates your business identity from your personal identity — a practical step toward liability protection.
Read more about obtaining an EIN for your business.
Get StartedEIN and Taxes
Your EIN is the number used to identify your business on virtually every federal tax filing. Depending on your entity type and operations, your EIN will appear on forms including:
- Form 1065 — Partnership income tax return
- Form 1120 / 1120-S — Corporate and S corporation income tax returns
- Form 940 — Employer's Annual Federal Unemployment (FUTA) Tax Return
- Form 941 — Employer's Quarterly Federal Tax Return (payroll taxes)
- Excise tax returns — for businesses in alcohol, tobacco, firearms, or other regulated industries
Your EIN is also required when withholding taxes on income other than wages paid to a non-resident alien, when administering a Keogh plan, and in most situations involving trusts and estates.
Closing or Canceling an EIN
If you close your business, you can request that the IRS close your EIN account. However the EIN number itself will remain permanently in IRS records.
To close your EIN account with the IRS, follow these four steps:
- File all final tax returns. Mark each return as "final return" to notify the IRS that no further filings are expected. This includes employment tax returns, income tax returns, and any applicable excise tax forms.
- Close business bank accounts. Settle all outstanding balances and formally close accounts associated with the EIN.
- Cancel licenses, permits, and registrations. Contact your state and local agencies to cancel business licenses, sales tax permits, and any other registrations tied to the entity.
- Send a written request to the IRS. Mail a letter to the IRS that includes your complete legal business name, EIN, business address, and the reason for closing the account. Send to: Internal Revenue Service, Cincinnati, Ohio 45999.
The IRS will acknowledge receipt of your closing request in writing. Keep that confirmation with your business records. The EIN remains in the IRS database permanently and will not be reassigned to another entity.
Frequently Asked Questions
What is an EIN number and what is it used for?
An EIN (Employer Identification Number) is a nine-digit number the IRS assigns to identify a business entity for federal tax purposes — formatted XX-XXXXXXX. Businesses use it to file tax returns, pay payroll taxes, apply for business licenses, and open business bank accounts. It functions as a Social Security Number for your business and is required by most employers, corporations, LLCs, partnerships, and nonprofits.
Do I need an EIN for my LLC?
If your LLC has more than one member or has any employees, yes — an EIN is required. Single-member LLCs without employees may use the owner's SSN for federal tax purposes, but most banks will require an EIN to open a business account. Getting an EIN also protects your personal Social Security Number from unnecessary exposure on business documents.
Is an EIN the same as a tax ID number?
An EIN is a type of tax ID number. "Tax ID number" is an umbrella term that includes EINs (for businesses), SSNs (for individuals), and ITINs (for non-resident aliens). When a bank or vendor asks for your "tax ID," they typically want your EIN if you have a business entity, or your SSN if you are a sole proprietor without an EIN.
Does an EIN expire?
No. An EIN does not expire. Once the IRS issues an EIN, it is permanently assigned to that business entity and remains in IRS records indefinitely — even if you close your business. If you close your business and later form a new entity, you will need a new EIN for the new entity; you cannot reactivate or reassign the old one.
Can I have more than one EIN?
Generally, one business entity receives one EIN. If you have multiple businesses organized as separate legal entities, for example, an LLC and a corporation, each entity needs its own EIN. You cannot have two EINs for the same legal entity. Sole proprietors who reorganize into a new entity type (such as forming an LLC) will need to obtain a new EIN for the new entity.
Where can I find my EIN number?
Your EIN appears on the original EIN confirmation letter (CP 575) the IRS mailed when you applied. You can also find it on previously filed tax returns, on IRS notices, in Box B of a W-2 if you have employees, or on bank account documents that required an EIN at opening. If you cannot locate your EIN, call the IRS Business & Specialty Tax Line at 800-829-4933 Monday–Friday, 7 a.m.–7 p.m. local time.
Do sole proprietors need an EIN?
Most sole proprietors are not required to obtain an EIN and may use their SSN for business tax filings. However, a sole proprietor must get an EIN if they hire employees, file for bankruptcy, or establish a Keogh or solo 401(k) plan. Getting an EIN voluntarily is still recommended as it protects your SSN and is required by most banks to open a business checking account.
What is the difference between an EIN and a state tax ID?
An EIN is a federal identification number issued by the IRS. A state tax ID is a separate number issued by your state's department of revenue or taxation, required for collecting sales tax, filing state payroll taxes, and other state-level tax obligations. You may need both — an EIN for federal purposes and a state tax ID for your state. They are different numbers issued by different agencies.
What happens to my EIN if I close my business?
Your EIN is never truly canceled — it remains permanently in IRS records even after your business closes. To formally close your EIN account, you must file all final tax returns (marked "final"), close associated bank accounts, cancel business licenses, and send a written closure request to the IRS in Cincinnati, Ohio. The IRS will confirm the account closure in writing, but the EIN number itself will not be reissued to another entity.
Get Your EIN Today
Understanding your EIN is foundational to running a legitimate business and the application process does not have to be complicated. LegalNature simplifies the entire process: tell us about your business, we handle the IRS application, and you receive your EIN without navigating federal forms on your own.
Why businesses choose LegalNature for EIN services:
- Fast turnaround with no IRS back-and-forth
- Secure, confidential filing process
- Guidance across all 50 states and the District of Columbia
- 30-day money-back guarantee — if you're not happy, we're not happy