What is an Employer Identification Number (EIN) and How to Obtain It
What Is an EIN?
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business for tax purposes. Think of it as a Social Security Number (SSN), but for your business instead of you personally.
The EIN is used for filing tax returns, opening business bank accounts, hiring employees, and handling a wide range of federal and state tax obligations. It's sometimes also called a Federal Tax Identification Number or Federal Employer Identification Number (FEIN).
An EIN follows a specific format: XX-XXXXXXX (two digits, a hyphen, then seven digits). Once assigned, this number stays with your business permanently — even if you close or stop operating.
Who Needs an EIN?
Not every business owner is required to have an EIN, but many are — and even those who aren't required often benefit from getting one. You must get an EIN if you:
Hire employees (even part-time or seasonal workers);
Operate as a partnership, corporation, or LLC;
File employment, excise, or alcohol/tobacco/firearms taxes;
Withhold taxes on income paid to a non-resident alien;
Have a Keogh plan or other self-employed retirement plan;
Are involved with trusts, estates, nonprofits, or cooperatives.
Sole proprietors without employees can technically use their personal SSN for tax purposes instead of an EIN. However, there are strong reasons to get one anyway — more on that below.
Why Get an EIN Even If It's Not Required?
Even if the IRS doesn't strictly require you to have an EIN, obtaining one is free, takes just a few minutes, and offers real advantages:
Identity protection - Without an EIN, sole proprietors and freelancers often share their SSN with clients, vendors, and on tax forms like the W-9. Using an EIN instead keeps your personal information more private and reduces your exposure to identity theft.
Easier business banking - Many banks require an EIN to open a business checking account - even for sole proprietors. A separate business account makes it much easier to track income and expenses and simplifies tax filing.
Business credibility - An EIN signals professionalism. Clients, vendors, and partners often expect to see a business tax ID rather than a personal Social Security Number.
Future flexibility - If your business grows and you later hire employees, change your business structure, or set up a retirement plan, you'll already have your EIN in place.
Even if you're just starting out as a freelancer or sole proprietor, getting an EIN is a smart first move. It costs nothing, and you can apply for it in minutes on the IRS website.
How to Get an EIN: Step by Step
The IRS offers several ways to apply for an EIN. The fastest and easiest method is the online application.
Apply Online
The IRS provides a free online EIN application at irs.gov. This is the quickest route — you'll receive your EIN immediately upon completing the application. Key details about the online application:
You must complete it in one session (you can't save and return later);
The session expires after 15 minutes of inactivity;
It's available Monday–Friday 6:00 a.m. to 1:00 a.m. ET, Saturday 6:00 a.m. to 9:00 p.m. ET, and Sunday 6:00 p.m. to midnight ET;
You can apply for only one EIN per responsible party per day.
Who can use the online application? You must have a principal place of business in the U.S. or U.S. territories, be the responsible party (or an authorized representative), and have the responsible party's SSN or Individual Taxpayer Identification Number (ITIN).
Can You Cancel an EIN?
No. Once the IRS assigns an EIN, it can't be canceled. If you no longer need your EIN (for example, you close your business), you can ask the IRS to deactivate it by sending a letter that includes the EIN, business name, address, and the reason for closing the account. Keep in mind that once you have an EIN, the IRS expects you to file any required tax returns or information returns — even if your business has little or no activity.
Conclusion:
Getting an EIN is one of the simplest yet most impactful steps you can take when launching or growing your business. The entire process is free, takes just a few minutes online, and gives you a professional foundation for everything from tax filing to opening a bank account. Whether you're required to have one or simply choosing to get one for the added benefits, there's no reason to put it off.
