FastBusinessFiling

Do I need an EIN?

Written by the filing team at FastBusinessFiling. Reviewed .

You need an EIN if your business has employees, has more than one member, files certain excise or employment tax returns, or elects to be taxed as a corporation. Beyond those legal requirements, nearly every LLC ends up needing one anyway, because banks will not open a business account without it. The IRS issues EINs free of charge, in minutes, through its own website, to any applicant whose responsible party has a social security number or ITIN. There is no government fee at any point. If somebody is charging you for an EIN, they are charging for their labour, and that is worth knowing before you agree to it.

The short version

  • The IRS never charges for an EIN. Any fee you pay is a service fee.
  • You need one for a business bank account, payroll, multi-member LLCs, and the S-corp election.
  • A single-member LLC with no employees can technically use the owner's SSN — but the bank will still ask.
  • No SSN or ITIN? The online application is closed to you and it goes by fax, which takes days.
  • Applying yourself takes about fifteen minutes on irs.gov during their opening hours.

When the IRS requires one

The clear-cut cases are employees, more than one member, a corporate tax election, certain excise taxes, and a few trust and estate situations. If any of those apply, the question is settled.

A single-member LLC with no employees is the ambiguous one. The IRS will let that owner use their own social security number for federal purposes. Whether that is a good idea is a different question.

When you need one anyway

Banks are the practical answer. Business accounts almost universally require an EIN, and running a company's money through a personal account is one of the reliable ways to undermine the liability protection you formed the LLC for in the first place.

There is also a privacy argument. Every W-9 you hand a client carries a tax ID. An EIN on that form keeps your social security number off a document that circulates through other people's accounts payable systems, which is worth fifteen minutes of anyone's time.

How to get one free

Go to irs.gov, find the EIN application, and complete it in one sitting — the session times out and does not save. If your responsible party has an SSN or ITIN, the number is issued immediately at the end. The service is open on weekdays during set hours, which surprises people expecting a website to be a website.

Have the legal name, the state, the formation date, the responsible party's details, and the reason for applying ready before you start.

The case where paying is reasonable

If the responsible party has no SSN or ITIN, the online application is not available. The application goes to the IRS by fax and comes back in roughly four business days, and there is a specific way to complete the form so that it does not come back rejected instead. That is genuine work.

The other case is simply not wanting to do it. That is a legitimate reason to pay somebody, in the same way people pay for tax prep they could do themselves. Our fee is $50, and we say on the page that the IRS does it free, because a customer who discovers that afterwards is right to be annoyed.

Getting the responsible party right

The IRS wants a natural person who controls the entity, with their SSN or ITIN, not a company and not a nominee. Naming the wrong person is a correction letter later, and corrections are slower than applications.

For a single-member LLC it is the owner. For a multi-member LLC it is whichever member the others agree controls the finances. It is not your accountant, and it is not the formation service.

Common questions

An EIN is one kind of tax ID. The umbrella term covers SSNs and ITINs for individuals and EINs for entities. When a bank or a client asks for your business tax ID, they mean the EIN.

Technically yes, but it is a bad idea. If the state rejects your name and you file under a different one, the EIN is now attached to a company that does not exist and you are writing to the IRS to fix it. Wait for the approval.

Nothing from the IRS, in any circumstance. Services charge for preparing and submitting it; ours is $50. There is no scenario in which a government fee applies.

A name change usually does not require a new EIN, only a notification. Moving to a new state can be a different matter depending on how the move is structured, because dissolving in one state and forming in another creates a new entity. Ask before you restructure, not after.

Minutes, if the responsible party has an SSN or ITIN and applies online during IRS hours. Around four business days by fax, which is the route for applicants without one.

Keep reading

FastBusinessFiling is a document filing service operated by Fast Filing Group LLC. We are not a law firm or an accounting firm, and nothing here is legal or tax advice. Rules and fees change; where this page states a figure, it carries the date it was checked. For advice about your own situation, talk to a licensed attorney or CPA.