What Is an EIN Number — The How-To Guide
What is an EIN number?
How do I get an EIN for my LLC?
Would you know how to find your lost EIN number if you misplaced it?
If you own a business or are thinking of starting one, these and other questions likely flood your mind. You’re not alone! Owning a business can be tough, especially if you’re not entirely fluent in all the lingo. An EIN, or Employer ID Number, isn’t something that comes up in casual conversation — even amongst business owners. And if you have questions, like “what is an EIN number?”, you’ll find the answers you need below.
Zenti partners with business owners at every step of their journey. Whether you’ve just opened an eCommerce retail store or need no-fee payment processing at your physical location, we’re here to help.
Below, we answer some of the most commonly asked questions about EINs by business owners (such as “What if I lost my EIN number?”). We’ll tell you how to find your lost EIN number and show you where you can find further information or assistance when needed.
What is an EIN Number?
You have a Social Security Number or SSN, and you likely know it by heart. Every citizen in the country gets assigned an SSN at birth or shortly after. So, what is an EIN number? Businesses also have this type of unique type identifier. Known as an Employer ID Number or Employer Identification Number, an EIN is the business equivalent of an SSN, and before your business is “born,” is the best time to get it.
The IRS issues an Employer ID number, or EIN, as a business identification. Like an SSN, an EIN is also a unique nine-digit number — unlike an SSN, the EIN is hyphenated once, after the first two digits.
What’s the difference between EIN and TIN?
What is an EIN number? What’s a TIN? Is there a difference?
An EIN lives under the Taxpayer ID Number (TIN) umbrella. EINs can also be called Tax ID numbers, Federal Tax ID numbers, or Federal Tax Identification Numbers. SSNs are also TINs. It’s important to note that a TIN isn’t a specific number — rather, it’s a term that refers to tax purpose numbers through the IRS: EIN, SSN, and ITIN.
EINs are business identifiers, SSNs are individual identifiers, and ITINs are numbers provided to people who live and work in the United States but are not US citizens.
Anyone who has an existing business must also have a TIN. Self-employed people typically use their SSN for their one-person show. Sole proprietors, such as a small convenience store owner who works alone, will often obtain an EIN for the business, even when the tax responsibility falls on the owner themselves — but sole proprietorships aren’t required to obtain an EIN. Businesses with more than one owner, large companies, and limited liability companies (LLCs) normally get an Employer ID Number (EIN) for tax purposes.
What is an EIN number used for?
An EIN represents your business’s identity. The EIN identifies your business to the IRS. Whether your business needs an EIN is based on how it operates, not where it operates. At its most basic, your EIN identifies your business to the IRS as an employer and is necessary for employer payroll taxes. You can use your social security number if you don’t need an EIN.
Like an SSN, a TIN and an EIN are also used for financial and legal purposes. For instance, if you apply for a loan as your business, establish a business line of credit, or apply for supplier credit, the lender or vendor asks for your identification. A business credit score is established with a TIN or an EIN. Finally, a legal form or government application requires a business to furnish a TIN or an EIN.
Employer ID numbers and taxes
One of the most important “uses” of your Employer ID Number is for tax collection and payment purposes. For instance, business owners with employees are responsible for calculating and paying federal and state taxes on their employees’ wages. Depending on the business’s size and budget, employers typically hire an accountant to tackle the payroll department.
The two main types of payroll taxes are FICA and FUTA (see below) and have different requirements. For instance:
- Social Security. Employers pay 6.2%, and employees pay 6.2%. The total social security tax rate is 12.4%.
- Medicare. Employers pay 1.45%, and employees pay 1.45%. The total Medicare tax rate is 2.9%.
These two taxes comprise the Federal Insurance Contributions Act (FICA) tax. The current FICA rate is the sum of the above contributions: 15.3%.
Employers (but not self-employed individuals) are responsible for Federal Unemployment Tax Act (FUTA) payments. These payments are also calculated based on an employee’s wages.
Knowing the answer to “What is an EIN number?” and having an EIN number are only the first steps of successful business ownership (as well as knowing how to find your lost EIN number!). If your employees process credit and debit card purchases, you also need a trustworthy retail payments partner on your side — and it doesn’t hurt to consult with an accountant.
Who needs an EIN?
Most businesses must have an EIN. As its name suggests, an EIN is reserved for businesses that hire employees. If you are the only business employee — maybe you sell adult toys online or an independent travel agent — you’re not required to have an EIN for your business.
On the other hand, businesses that have, or will have, employees are required by law to obtain an Employer ID number.
When do I need an EIN or Employer ID Number?
We’ve settled the “what is an EIN number” debate — now it’s time to discover when you should get one for your business. If you need an EIN for your business, it’s best to obtain it before you open your doors (or virtual “doors” if you’re an online business). You’ll need to apply for an EIN if your business:
- Has any employees (not counting yourself)
- Is incorporated, or you’re taxed as a corporation
- Has filed for bankruptcy more than once
- Is an LLC with multiple partners
- Offers 401(k) or Keogh plans
- Has inherited or purchased another type of business
If your situation is unique and doesn’t fit into any of the above, you might still be asking, “What is an EIN number, and do I really need one?” For instance, is your operation tax-exempt? The IRS website offers a quick quiz to see if EIN requirements apply to you.
If your business falls into those requiring an EIN, consider consulting with a financial advisor to learn how to ensure your business lasts. Applying for your EIN number is free, but other permits or licenses you may need to operate, such as a Doing Business As (DBA), aren’t free. Accountants knowledgeable in your industry can fill you in on the various expenses in your area.
What if I lost my EIN number?
If you ever lose or forget your EIN, would you know how to find your lost EIN number? Thankfully, you can find handy EIN lookup services online. You can also contact the Internal Revenue Service (IRS) to help you retrieve your lost or forgotten EIN number. Plus, you can’t lose your EIN number — not really. In other words, it can’t be canceled. Even if you close your business, that EIN is still attached to you and can be reused for a future business.
Does an LLC require an EIN?
Your question: “What is an EIN number?” led to the question, “Does an LLC require an EIN?” quickly followed by “Then, how do I get an EIN for my LLC?” And if you were to ever lose or misplace your paperwork, you’d wonder how to find your lost EIN number.
The quick answer is: it depends. Not every LLC needs to get an EIN. For instance, some LLCs are sole proprietorships or single-member LLCs and therefore do not require an EIN. But an LLC can also be formed as a partnership or a corporation. The LLCs tax type, or classification, is chosen when the LLC is formed. That said, LLC members can change the tax classification at any time after that with one caveat — if an LLC changes its tax classification, the classification cannot be changed again for five years, except in certain circumstances.
First, let’s see if your LLC needs an EIN. You must obtain an EIN if the LLC:
- Has two or more members. An EIN comes in handy when filing LLC informational returns on Form 1065. LLC members may even need the EIN to file their own personal tax returns.
- Has employees. An LLC with employees needs an EIN for payroll tax withholding and to make payroll tax payments to the IRS. To file tax returns for an LLC, an EIN is a must.
- Is taxed as a corporation. An LLC can typically choose its classification status. The classification must be chosen at the time of forming the LLC.
LLCs that are also sole proprietorships with no employees don’t have to obtain an EIN, but it doesn’t hurt to have one. If you ever wanted to open a business bank account with your business’s name or get a business loan, the bank or lender may require an EIN. Plus, if you’re hoping to get investors now or in the future, partner with specific vendors, or target a specific consumer market, having an Employer ID Number inspires confidence in your business.
Which brings us back to the next question: “How do I get an EIN for my LLC?”
How do I get an EIN for my LLC?
No matter what business structure you use, whether you choose an LLC, LLP, or sole proprietorship, the process is the same.
To get your business an EIN, visit the IRS.gov page for Employer Identification Numbers, scroll down, and click on the Apply for an EIN Online button. The next page walks you through the application process and offers links to valuable information.
To apply online for your EIN, make sure you can provide:
- Social security number(s) (for all members if an LLC)
- A reason why you’re applying for an EIN
- An estimate of the wages you expect to pay to employees
- Personal information for the principal officer or responsible party
- The state where your LLC operates**
- The business’s structure
Applying online is the easiest and fastest way to get your EIN number. If you apply during business hours, you’ll get your EIN number immediately after processing your application. Click the Apply Online Now button when you’re ready to apply.
**International business owners can also obtain EIN numbers. If you’re an international business owner outside the United States, please call (267) 941-1099 to speak to an IRS EIN specialist.
Do I already have an EIN?
Parents apply for a newborn’s social security card shortly after birth. As a business owner, you must apply for an EIN. If you haven’t applied for an Employer ID Number, you don’t have one yet. To get your EIN, follow the steps in the section above.
How do I find my Employer ID Number?
What if you were to lose your EIN number? Would you know how to find your lost EIN number?
The following options can help you locate a misplaced or forgotten EIN:
- Call the IRS business line at 1(800) 829-4933.
- Call the agency where you obtained your business license.
- Contact the bank that services your business account.
- Request a business credit report.
- Look for the notice you received when you applied for the EIN.
- Look for a previous year’s tax return.
- Look for documents you may have needed the EIN, such as a business loan.
Can I look up the EIN of other businesses?
Since EIN numbers are matters of public record, you can look up an EIN even if you don’t own the business. The easiest way to find a business’s EIN number is on EDGAR, a subsection of the Securities and Exchange Commission’s (SEC) website. But there’s an exception: Not every business entity is listed in EDGAR.
All publicly-traded companies are mandated to register with the SEC, as are any privately held companies with 500 or more stock- or options-holders. Private companies and small businesses with less than 500 do not have to register.
Can you cancel an Employer ID Number?
No. Once the IRS issues an EIN, it permanently identifies that specific business — but it can be transferred to a new business if the applicant chooses. You will only receive a “new EIN” when applying for the first time.
Get your EIN and Partner with Zenti
Getting your EIN makes you a bonafide business — in the eyes of consumers, vendors, and other entities. Once you obtain your EIN, you’ll need a merchant account. Reach out and learn how Zenti can help.