What is an EIN, and how do you get one?

An Employer Identification Number is a nine-digit federal tax identifier for a business, functioning roughly as a Social Security number does for an individual. You apply directly through the IRS website, the application takes about fifteen minutes, and the number is issued immediately at the end of the session. It costs nothing. A substantial industry of third-party sites charges a hundred dollars or more to submit the same free form on your behalf, and they rank well in search results, which is why so many new business owners pay for something the government gives away.

You need one if you have employees, operate as a corporation or partnership, file certain excise or employment tax returns, or have a Keogh plan. Beyond the requirements, there are practical reasons to get one even as a solo operator. Banks generally require an EIN to open a business account. Clients issuing a 1099 need a taxpayer identification number from you, and providing an EIN instead of your Social Security number reduces how widely your personal identifier circulates, which is a real identity-theft consideration when you work with many clients.

Two operational notes. The online application requires a responsible party with a valid Social Security number or ITIN, and the IRS limits applications to one per responsible party per day. And an EIN is permanent: it is never reissued or reused, and if you close the business you close the associated account rather than cancelling the number. Changing your business structure, such as converting a sole proprietorship to a corporation, generally requires a new EIN, while simply changing your business name or address does not.