Just as individual U.S. citizens have unique social security numbers to identify themselves, U.S. businesses are issued employer identification numbers, commonly referred to as EINs. EINs are unique, nine-digit numbers issued by the Internal Revenue Service (IRS) and primarily used to report employment taxes. They may also be called federal tax ID numbers. Like social security numbers, they never expire and are never reissued to another business.
To receive an EIN, a business needs to be located in the U.S. and the person applying for the EIN has to have their own taxpayer identification number, such as a social security number.
A wide variety of entities may apply for and be issued an EIN, from sole proprietorships to partnerships, LLCs, corporations, government agencies, non-profits, and other types of organizations.
There are no size requirements or limitations, as far as employees are concerned. A sole proprietorship with only the owner as employee can request one, as can a multinational corporation or charity.
When are they needed?
Businesses need an EIN to pay their federal taxes online, to file their annual tax return, and to issue payroll and tax documents to suppliers. The number has less to do with employees and more to do with taxation, so if your business pays taxes (and who doesn’t), you need an EIN.
How to apply
In the past, companies completed IRS Form SS-4 to request an EIN. Today, however, the IRS encourages business owners to apply for an EIN online.