Filing for an Employer Identification Number (EIN) is one of the first steps to making your business official. Whether you’re forming a corporation, a limited liability company (LLC), or a partnership, an EIN serves as your business’s federal tax ID, much like a Social Security number (SSN) for an individual. You’ll need an EIN to hire employees, open a business bank account, and file taxes. The process for getting an EIN is relatively simple, and you can usually complete it online in about 10 minutes.

There are a few things to consider before you file. For example, you’ll need to decide who will be the “responsible party” for your business, which is the person listed on the EIN application as the main point of contact with the United States Internal Revenue Service (IRS). Below, we’ll explain how to file for an EIN and how to avoid common mistakes that could slow the process.

What’s in this article?

• What is an EIN?
  
• Who needs an EIN?
  
• Preparing to file for an EIN
  
• How to file for an EIN online
  
• How to apply for an EIN by fax or mail
  
• Common mistakes to avoid when filing for an EIN
  

What is an EIN?

An EIN is a unique nine-digit number that the IRS assigns to businesses for tax purposes, similar to an SSN for an individual. You use your EIN to identify your business when filing taxes, paying employees, or applying for certain licenses.

Who needs an EIN?

You need an EIN if you plan to hire employees, form a corporation or partnership, or open a business bank account. It’s also required if you’re handling payroll taxes, applying for business credit, and for many other purposes. Even if you’re a sole proprietor, you might want to get an EIN to separate your personal and business finances and simplify your taxes.

Preparing to file for an EIN

Before you file for an EIN, there are a few things you can do to prepare. First, determine your eligibility: to apply online for an EIN, your business must be physically located within the US or its territories. You must also be able to identify a responsible party, which is the person who controls, manages, or directs the business’s day-to-day operations and has access to the business’s funds. This person must have a valid Taxpayer Identification Number (TIN) such as an SSN, Individual Taxpayer Identification Number (ITIN), or an existing EIN.

If you meet these eligibility requirements, you’ll need to gather the following information:

• The full legal name of your business and any trade names or “doing business as” (DBA) names

• The mailing address and physical address of your business

• Your entity type (e.g., corporation, LLC) and reason for applying for the EIN

• Your business’s primary activities and how many employees you expect to have in the first year

How to file for an EIN online

The easiest way for most businesses to file for an EIN is online. Here’s a step-by-step guide:

1. Go to the EIN application section of the official IRS website.

2. Click on the “Apply online now” button. Review the guidelines on the information page, then click “Begin Application.”

3. Select your business’s legal structure (e.g., sole proprietorship, LLC). The IRS provides brief descriptions for each type. Press continue.

4. Here, the steps diverge depending on your business type. If you’re applying as an LLC, for example, you’ll need to enter the number of members and where the business is physically located, while a sole proprietor will need to provide more information such as a reason for applying. State whether you are the business owner or acting as a third-party designee.

5. Input the legal name, trade name (if applicable), and physical address of your business. Specify the county and state where your business operates. This is important for tax purposes.

6. Tell the IRS why you’re applying for the EIN. For instance, are you starting a new business? Hiring employees? Restructuring an existing company?

7. Describe your business’s primary activities. The IRS will provide a list of categories you can select from.

8. Double-check all the information you’ve entered for accuracy, then submit the application. You’ll receive your EIN right away and can download or print the confirmation for your records.

How to apply for an EIN by fax or mail

If you don’t want to apply for an EIN online, you can also file by fax or mail. Start by downloading Form SS-4 from the IRS website and filling it out. It will ask for details including your business name, the responsible party, and the reason you’re applying. To avoid delays, double-check that all the information is correct.

• Applying by fax: Find the fax number for your state on the IRS website and fax your completed form to that number. The IRS will typically send you your EIN by fax within four business days.

• Applying by mail: Find the IRS address for your state on the IRS website and mail your completed form to that address. Mail-in applications take longer to process and it can take up to four weeks to receive your EIN.

• International applicants: If you’re applying from outside the US, you’ll need to call the IRS directly at +1 (267) 941-1099 (not a toll-free number). Be ready with all the necessary information. The IRS will handle the process over the phone and issue your EIN once it confirms your information. This is the go-to option for international businesses that can’t easily access the online or mail processes.

Common mistakes to avoid when filing for an EIN

When filing for an EIN, it’s easy to overlook certain details that can slow the process or lead to bigger issues later on. Here are some common mistakes to avoid.

Multiple EINs for the same entity

Many business owners make the mistake of applying for multiple EINs, usually because they’re unclear about when a new EIN is required. The IRS mandates a new EIN in only specific situations, such as a change in entity structure (e.g., moving from an LLC to a corporation) and when there’s a fundamental shift in ownership. If your business is simply expanding or developing within the same structure, you won’t need a new EIN. Filing for another number when you don’t need one can cause unnecessary complications with the IRS such as duplicate filings and incorrect tax accounts.

Incorrect or inconsistent information

Seemingly small errors such as misspelling the business name, mismatching addresses, and entering the wrong TIN can cause delays and misalignments in your IRS records, which can complicate tax returns, payroll setup, or business bank accounts in the future. Double-check all your entries, especially for the responsible party’s identification details.

Issues with third-party designees

If you’re designating someone else (e.g., accountant, attorney) to file for your EIN, the responsible party must be formally authorized to act on the business’s behalf. The IRS requires this approval to be on record, and failing to provide proper authorization can invalidate the application or create complications with compliance later on. Missteps here can cause delays in obtaining your EIN and lead to confusion about who’s authorized to handle tax documents on your behalf.

How to save money when incorporating a business

While some incorporation fees are unavoidable, it’s possible to lower your business’s costs by handling as much as possible in-house and seeking professional help when necessary. Here are a few key strategies for saving money:

• DIY incorporation: If your business structure is straightforward and you’re comfortable with paperwork, filing the incorporation documents yourself can save you hundreds or even thousands of dollars in legal fees. Online resources and guides are available to help you through the process.

• Compare registered agent services: Registered agent fees vary between providers. Compare prices and services from different companies to find the best deal for your needs.

• Consider forming an LLC: Limited liability companies (LLCs) are often simpler and less expensive to form than corporations, making them a cost-effective option for small businesses.

• Choose the right location: Some locations have lower filing fees and franchise taxes than others. Research different places to see which ones have the most favorable business environment for your industry and budget. Delaware is a popular choice in the US for its business-friendly laws and low fees, for example.

• Take advantage of online legal services: Online legal services offer affordable packages that can guide you through the incorporation process and provide templates for necessary documents. Some might even have discounts and promotions for new customers. This can be less expensive than hiring an attorney.

• Negotiate professional fees: If you need to hire an attorney or accountant, don’t hesitate to negotiate their fees. Some professionals might offer discounts for startups or small businesses.

• Plan for ongoing costs: While saving on initial incorporation costs is important, make sure to factor in ongoing expenses such as annual report fees, franchise taxes, and registered agent fees.