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.

Angel investors vs. other types of investors

Before pursuing funding from angel investors, familiarize 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 specialized 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.