What is an EIN? Does your business need one? How to apply

Business owners, solopreneurs, and self-employed individuals often question whether they need an employer identification number (EIN). QuickBooks' Entrepreneurship in 2025 report found that 54% of respondents are looking to start a new business, so understanding the role of an EIN is more important than ever. 

Getting a business EIN number, also known as a business tax ID number, helps establish your business and will help you keep your legal and financial matters in order. 

While some small businesses can operate without one, it’s always best to do your research to ensure you're set up for success. Let’s explore what an EIN number is, who needs one, and how to use it.

Do you need an EIN number?

It depends. The IRS requires an EIN for certain types of businesses, including corporations, partnerships, and LLCs with employees. Sole proprietorships and single-member LLCs without employees usually don't need an EIN, but there are still benefits to having one.

An EIN offers a layer of separation between your personal and business finances. This can be crucial for protecting your personal assets, building business credit, and simplifying your accounting. It also adds legitimacy to your business in the eyes of customers and partners. 

According to the IRS, your business will need an EIN if:

• Your company has employees
• Your business is a partnership or corporation
• You have filed or will file tax returns for any of the following: alcohol, tobacco, firearms, employment, or excise taxes
• You withhold taxes on income paid to a nonresident alien

Beyond filing taxes, you may also need an EIN to:

• Open a business bank account 
• Apply for a company credit card 
• Apply for business permits or licenses
• Apply for a business loan
• Send 1099 forms to contractors

Note that having an EIN is necessary if your business pays employees or independent contractors.

What is the difference between an EIN and a TIN?

While people often use the terms EIN and TIN interchangeably, there's a key distinction. A taxpayer identification number (TIN) is a broad term that encompasses several types of identification numbers used by the IRS for tax purposes. An EIN (employer identification number) is simply one specific type of TIN used to identify businesses.

Think of TIN as the umbrella term, with EIN falling under it. Essentially, an EIN is the business equivalent of a Social Security number (SSN), another type of TIN. Just as the IRS uses an individual’s SSN to track earnings and tax obligations, an EIN does the same for businesses. This helps the IRS keep track of businesses' tax liabilities and ensures that they comply with tax laws.

Other types of TINs include:

• SSN (Social Security number): For individuals.
• ITIN (individual taxpayer identification number): This is for individuals who need to file a U.S. tax return but don't have, and aren't eligible for, a Social Security Number (SSN). This applies to many non-U.S. citizens, including resident and nonresident aliens, who have U.S. tax obligations.
• ATIN (adoption taxpayer identification number): A temporary TIN assigned to a child who is in the process of being adopted.
• PTIN (preparer taxpayer identification number): Used for tax professionals who prepare tax returns.

In short, all EINs are TINs, but not all TINs are EINs. An EIN is specifically for businesses and other entities, while a TIN is a broader category that includes various identification numbers used for tax purposes.

Benefits of an EIN number for your business

While an EIN isn’t always necessary, it does have benefits. This includes:

• Separating business and personal: An EIN keeps your business and personal finances separate, which is beneficial when paying employees and yourself or applying for a business loan. 
• Building credit: Establishing credit for your business will serve you well as you grow and need financing. Instead of using your own credit, you can use your business’s credit. 
• Protecting yourself: Using an EIN can protect your personal assets from business failures. For example, in the event that your business files for bankruptcy, you can help protect your personal assets by keeping your personal and business finances separate. 

Another reason you may want to apply for an EIN is your privacy. For example, if you’re a contractor who works with a large number of clients, disclosing your Social Security number may expose you to identity theft.

How to get an EIN

The IRS allows you to apply for an EIN for free on its website. The application process is relatively easy.  In most cases, you can apply online and receive your EIN immediately. 

Here’s a summary of what to expect when filing:

• Determine eligibility: The IRS has a shortlist of requirements you must meet before applying for an EIN.
• Understand the application: This simply means you have to finish the application in one session and cannot have more than 15 minutes of inactivity.
• Submit your application: Once you complete your application, you can then download, save, and print your EIN letter for your records.

You’ll need certain information to complete the EIN application, including: 

• Your legal business name
• Address of the business 
• Name and Social Security number of the responsible party

The responsible party is the person responsible for the company and who will sign the application. 

When you need to apply for a new EIN

If you make common changes to your business, like changing the name or address of your business, you won’t need a new EIN. However, if the ownership or structure of your business changes, you will need to apply for a new EIN. 

Depending on your business structure, here are some instances when you’ll need to get a new EIN: 

• Sole proprietorships: You hire employees or contractors or decide to open a business bank account. 
• Partnerships: You will need a new EIN if you change the structure or one of the partners buys the partnership and plans to operate it as a sole proprietorship. 
• Corporations: You’ll need a new EIN if you change the structure of your business, become a subsidiary of a corporation, or form a new corporation following a merger. 
• Limited liability companies (LLCs): You will apply for a new EIN if you add more members to a single-member LLC or convert an LLC to a corporation. 

On the other hand, you do not need to apply for a new EIN if: 

• You change the name or location of your business
• Your corporation or partnership declares bankruptcy
• You elect S-corp taxation 

If you elect a different taxation for your business, you will instead use Form 8832 to update the IRS.

What happens if you lose your EIN?

Losing your EIN can be frustrating, but you can recover your EIN with a few simple steps. Here's what to do: 

1. Locate your EIN confirmation notice. When you first applied for your EIN, the IRS issued a computer-generated notice confirming your application and providing your EIN. Try to find this notice in your records.
2. Contact banks or agencies where you used your EIN. If you used your EIN to open a bank account or apply for a state or local license, reach out to that bank or agency. They should have your EIN on file.
3. Check a previously filed tax return. If you've already filed a tax return for your business, your EIN will be printed on it.
4. Call the IRS. If the above options fail, you can call the IRS Business & Specialty Tax Line at 800-829-4933. They are available Monday through Friday, 7 a.m. to 7 p.m. local time. An agent will ask you for identifying information to verify that you are authorized to receive the EIN and then provide the number to you over the phone.

To prevent future complications, retain a copy of your EIN in a secure and readily accessible location.

Find peace of mind come tax time

An EIN is a fundamental element of establishing and running a successful business. By obtaining an EIN, you can effectively separate your business and personal finances, build a strong business credit profile, and protect your personal assets. While not always required, the benefits of having an EIN often outweigh the simple application process.

Ready to streamline your business operations and ensure compliance with tax regulations? With the right tools and resources, such as QuickBooks accounting software, you can confidently navigate the complexities of business ownership and focus on what matters most – growing your business.

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