Do I Need an EIN?

The Short Answer

All businesses except sole proprietors without employees need an EIN. Sole proprietors may wish to obtain an EIN to avoid using their SSN.

“Generally, businesses need an EIN.”

IRS

The Long Answer

An Employer Identification Number (EIN) is a unique identifier the IRS assigns to your business and is used for filing tax returns, opening a bank account, and hiring employees.

Per IRS regulation, obtaining an EIN is required if any of the following apply to your business:

  • The business is a corporation
  • The business is a partnership
  • You have employees
  • You will open a bank account that requires an EIN for banking purposes
  • You file tax returns for: Employment, Excise, Alcohol, Tobacco, or Firearms
  • You withhold taxes on income (other than wages) paid to a non-resident alien
  • You have a Keogh plan
  • You are involved with any of the following types of organizations
    • Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
    • Estates
    • Real estate mortgage investment conduits
    • Non-profit organizations
    • Farmers’ cooperatives
    • Plan administrators

Even if an EIN is not required per IRS regulations, you may still want to an EIN if the following apply.

  • Business owners who prefer privacy obtain an EIN to avoid giving out their SSN.
  • Certain banking purposes require and EIN and it can be inconvenient to acquire an EIN in the midst of a business transaction.
  • Some business licenses and permits will require an EIN.

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