If you run a business in the US, you’re likely familiar with the importance of an Employer Identification Number (EIN). Since business documents such as licences and permits need to be regularly renewed, new business owners often wonder: does an EIN expire? With the paperwork and compliance involved in running a business, it’s easy to lose track of these administrative details.

The short answer is no, your EIN doesn’t have an expiration date. Once it’s assigned, it permanently stays with your business. In certain scenarios, however, you might need to update or apply for a new EIN, especially when making major changes to your business. Here’s what you need to know.

What’s in this article?

• What is an EIN, and why do businesses need one?
  
• Does an EIN expire?
  
• How to keep an EIN active
  
• What happens if a business loses its EIN?
  
• When might a business need a new EIN?
  
• How to update business information linked to an EIN
  

What is an EIN, and why do businesses need one?

An EIN is a unique nine-digit number issued by the Internal Revenue Service (IRS) in the US to identify a business for tax purposes, like a Social Security Number for your business. It’s used for business activities such as opening a business bank account, filing taxes, and hiring employees.

You need an EIN if you plan to form a corporation or partnership. Even if you’re a sole proprietor, an EIN can be useful for separating your personal and business finances. It’s also required if you want to set up a Keogh retirement plan or are involved with non-profit organisations.

Does an EIN expire?

No, an EIN does not expire. Once the IRS issues an EIN to your business, it’s permanent and remains associated with your business for its lifetime. Even if the business changes structure or ownership, the EIN typically stays the same unless the IRS specifically requires you to get a new one (e.g., converting from a sole proprietorship to a corporation).

How to keep an EIN active

You don’t need to do anything specific to keep your EIN active. But you must comply with IRS regulations by paying business taxes and following filing requirements.

Here are some business obligations you need to fulfil:

• File annual tax returns: Whether you’re a sole proprietor, corporation, partnership, or limited liability company (LLC), you must file federal tax returns each year. If you don’t, the IRS might flag your EIN for inactivity or non-compliance.

• Report payroll taxes: If your business has employees, you must file payroll taxes and submit the appropriate forms (such as 940 and 941) on time. Failure to do so can lead to penalties and issues with your EIN status.

• Stay current with state requirements: Some states require annual reports or franchise tax filings depending on your business structure. Filing on time keeps your business in good standing.

• Update business information: If there’s a change in business name, address, or ownership structure, notify the IRS to keep your records current. This helps prevent confusion or filing delays.

What happens if a business loses its EIN?

If you lose your EIN, don’t worry – it’s easy to recover. The IRS keeps a record of your EIN, and you can retrieve it in a few ways:

• Check previous documents: Look through any tax filings, business bank account documents, or other records where you might have used your EIN. It’s often listed on tax returns or official IRS correspondence.

• Contact the IRS: If you can’t find it in your records, you can call the IRS Business & Specialty Tax Line at 1-800-829-4933. They’ll ask for identifying information about your business (such as the name, address, and type of business) to verify your identity before providing your EIN over the phone.

• Look at your IRS confirmation letter: When you first applied for the EIN, the IRS sent a confirmation letter either by post or email. If you still have this letter, you can retrieve the number there.

While losing your EIN doesn’t affect your standing, it’s important to recover it to stay on top of tax filings and other obligations that require the number.

When might a business need a new EIN?

While changing your business name or location won’t require a new EIN, you might need a new number in the event of other changes, such as business structure or ownership. It’s always a good idea to check with the IRS or your accountant when making changes to ensure you’re following the correct processes.

Here are the main situations when the IRS requires you to obtain a new EIN:

• Changing business structure: If you switch from one legal structure to another – such as converting from a sole proprietorship to a corporation or from a partnership to an LLC – you’ll need a new EIN. Each structure is treated as a distinct legal entity.

• Changing ownership: When a business undergoes substantial ownership changes or when the entire ownership transfers to a new party, a new EIN is typically required.

• Forming a new corporation: If you start a new corporation, even from an existing sole proprietorship or partnership, you’ll need a new EIN.

• Filing bankruptcy: If your business files for bankruptcy and is reorganised, a new EIN might be necessary.

• Inheriting a business: If you inherit an existing business and decide to run it as a sole proprietor, you’ll need a new EIN.

How to update business information linked to an EIN

To update the information linked to your business’s EIN, you need to inform the IRS. Minor changes – such as updating your business phone number or email address – can be reported on your next tax return or by calling the IRS Business & Specialty Tax Line at 1-800-829-4933. You should inform the IRS of major changes, including a change in business name, address, or ownership structure.

Here’s how to address each of these scenarios:

Changing your business name

If you’re a sole proprietor or a single-member LLC, you can send the IRS a letter to change your business name. Include your EIN, old business name (if applicable), and new business name. Make sure you or an authorized person have signed it, and send it to the IRS office where you file your taxes.

If you run a corporation or partnership, you can report a name change on your annual tax return (Form 1120 for corporations, Form 1065 for partnerships). If it happens midyear, send the IRS a letter signed by a corporate officer or partner.

Updating your address, ownership, or responsible party

If your business moves, changes ownership, or gets a new responsible party (someone in charge of your business’s finances or taxes), you should notify the IRS within 60 days by filing Form 8822-B. It’s a simple form you can mail to the IRS office listed on the form’s instructions. While you can also update your address on your next tax return, the IRS prefers to know within 60 days so mail goes to the right place.

Changing your business structure

If you’re changing your business structure (e.g., going from a sole proprietor to a corporation), you’ll likely need a new EIN. If you don’t need a new number, report the change when you file your taxes for the new structure.

Angel investors vs. other types of investors

Before pursuing funding from angel investors, familiarise yourself with other types of startup investors. Here's an overview of investment options:

• Venture capitalists: Venture capitalists (VCs) are firms or individuals that invest in startups showing strong potential for growth, usually in exchange for equity. Unlike angel investors, they typically invest during the later stages of a startup's development, after the business has shown some market traction. VCs invest larger sums of money than angel investors and are usually more involved in the direction of the company. They seek substantial returns and typically have a more aggressive view toward scaling the business and achieving an exit within a specific timeframe.

• Seed funds: Seed funds are specialised VC funds that focus on early-stage investments, often before angel investment and larger VC rounds. They invest in startups that have moved past the conceptual stage and have a minimum viable product (MVP) or some initial traction.

• Incubators and accelerators: These programs support early-stage companies through education, mentorship and financing. Incubators focus most often on the initial development phase, helping entrepreneurs turn ideas into a viable business. Accelerators, on the other hand, look to scale up the growth of existing companies over a short period of time.

• Corporate investors: Some corporations invest in startups to access innovative technologies, enter new markets, or nurture strategic partnerships. These investors can offer ample resources, but they might seek more than just financial returns, such as an ownership stake in the technology or control over the company's direction.

• Crowdfunding: This involves raising small amounts of money from a large number of people, typically through online platforms. Crowdfunding can be a good option for startups that want to validate their product with a broad audience, interact with potential customers and raise funds without giving up equity or incurring debt.

• Government grants and subsidies: In some sectors – particularly those involving scientific research, clean technology, or social impact – government grants and subsidies can provide funding without diluting equity.

• Peer-to-peer lending and debt financing: Debt financing includes loans from financial institutions or peer-to-peer lending platforms. This type of financing is typically more challenging for early-stage startups to secure and it obligates a startup to repay the loan, with interest, but it doesn't dilute ownership.

• Family offices: High net-worth families often have private wealth management advisory firms, known as family offices, that directly invest in startups. These investors can provide substantial funding and might be interested in longer-term investments compared to traditional VCs.

• Angel groups and syndicates: Unlike individual angel investors, angel groups or syndicates pool resources to invest in startups. These groups can provide larger sums of capital and combine the expertise and networks of multiple investors.

Each type of investor offers different advantages, expectations and levels of involvement. Startups should carefully consider their stage of development, industry, funding needs and the kind of strategic relationships they want to grow before deciding which type of investor to work with.