Employer Identification Number is required for any business owner, estate operator, or non-profit organizer. The IRS assigns the EIN much in the same way as it assigns a Social Security Number (SSN)—only to a business or legal entity. If you are self-employed or establishing your own company, knowing how to acquire an EIN online might save time and eliminate compliance issues.
This is the step-by-step procedure to get your EIN, who requires it, and a comparison with other numbers such as the SSN.
What Is an EIN and Who Needs It?
An EIN is a unique nine-digit number assigned by the Internal Revenue Service for the purposes of tax administration. You’ll need an EIN if you:
· Start or operate a business
· Hire employees
· Open a business bank account
· File business taxes
· Administer an estate or trust
· Form a non-profit organization
In short, an EIN is required any time your financial activity involves a separate legal entity.
EIN vs SSN: What’s the Difference?
While both are taxpayer identification numbers, the EIN vs SSN comparison boils down to purpose:
· SSN (Social Security Number) is used for personal income tax, benefits, and identification.
· EIN is used for business, estate, and non-profit tax filings.
Applying for an EIN using an EIN rather than an SSN maintains a separation between business and personal finances and safeguards your personal data.
How to Online Apply for an EIN
The best way to apply for an EIN is by using the IRS online EIN Assistant. Follow these steps to apply:
1. Go to the IRS website and proceed to the EIN application page.
2. Choose the type of entity (sole proprietor, LLC, non-profit, estate, etc.).
3. Enter the name and taxpayer identification number (SSN, ITIN, or EIN) of the responsible party.
4. Provide business or estate information (name, address, purpose).
5. Apply and get your EIN immediately.
The online EIN application is available Monday–Friday, 7 a.m.–10 p.m. Eastern Time. It's free and takes only a few minutes.
How to Get an EIN for a Business
If you are starting a business, the IRS requires an EIN for some key activities:
· Hiring employees
· Filing employment or excise taxes
· Opening a business checking account
· Applying for licenses or permits
How to apply for an EIN for a business:
· Decide on your business structure (e.g., sole proprietorship, LLC, partnership).
· Apply online on the IRS website.
· Have all documents ready (business name, owner SSN/ITIN, and address).
EIN for Self-Employed Individuals
Self-employed individuals, including freelancers and independent contractors, ask themselves if they need an EIN.
While not always required, it's a good practice to obtain an EIN for self-employment use if you:
· Want to establish business credit
· Operate under a trade name
· Hire others or subcontractors
· Want to keep business and personal taxes separate
Even as a sole proprietor, an EIN helps to add a layer of professionalism and vise protection for the SSN.
How to Apply for an EIN for an Estate
Where a person is carrying on legal or financial affairs in the name of a decedent, an EIN must be secured for the estate.
To apply:
· Select "Estate" as the legal structure when you apply for an EIN.
· Provide the name and SSN of the executor.
· Attach documentation that evidences authority (e.g., letters testamentary).
That EIN is used to file tax returns for the estate and to manage funds of the estate.
EIN for Non-profits: Why It's Necessary
Non-profits must obtain EINs before they request their 501(c)(3) status, open a bank account, or accept donations.
To obtain a tax ID number for non-profit organizations:
· Apply as a corporation or association with the IRS
· Ensure your organization's purpose qualifies under IRS non-profit guidelines
· Apply using the EIN when seeking tax-exempt status with Form 1023 or 1023-EZ
Requirements to Apply for EIN
Gather the following information before applying:
· Legal name of the entity (business, estate, nonprofit)
· An address for mailing
· Type of entity
· Responsible party's name and taxpayer ID
· Reason for applying (e.g., starting a business, forming an estate, hiring employees)
Data for filing an EIN; right data would make processing easier.
How Long Does It Take to Obtain an EIN?
It depends on the method of application:
· Online: Immediate issuance
· Fax: Approximately 4 business days
· Mail: 4–6 weeks
For the fastest processing, the online EIN application is the best choice.
Can You Get an EIN Without an SSN?
Yes. It is possible to obtain an EIN without SSN, especially if you are a foreign citizen or are not eligible for an SSN or ITIN.
Here's how:
· Complete Form SS-4 manually
· Leave the SSN line blank or write "Foreign"
· Fax or mail the form with an explanation letter
· Call the IRS International EIN Unit if necessary
Note: Applicants outside the U.S. cannot apply online and should apply via fax or mail.
Final Thoughts
Obtaining an EIN is indeed an imperative step to be undertaken if you are a new business, executor of an estate, or founder of a non-profit.
Applying for an EIN online will make things much easier for you, and, as such, you are spared any delays. There are times when with the right documents and clear knowledge of the IRS requirements, it really doesn't have to be all that difficult or stressful to get your EIN.
If you feel unsure about this or how to structure your entity, talk to a tax professional so that you can be made totally aware of the IRS regulations.
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