Get a Tax ID Number for Your Small Business (Step by Step)

What a small business tax ID number means

A tax ID number for a small business is often an Employer Identification Number, or EIN. The IRS issues this nine-digit number to identify a business for federal tax purposes. You can request an EIN directly from the IRS for free.

An EIN is not the same as your Social Security number. It identifies the business on tax forms, payroll records, and some bank documents. A business may need one even when it has no employees.

Do not pay a third-party site just to submit an EIN application. Some firms offer help for a fee, but the IRS application itself has no charge. Use the IRS site or send the required form yourself.

Keep the confirmation notice with your business records once the IRS issues your number. You will use the same EIN for the business while its legal structure stays the same.

Who needs an EIN, and who can choose to get one?

Many businesses must get an EIN. This includes most businesses with employees, corporations, and partnerships. Some trusts, estates, and tax-exempt organizations also need one for federal filings.

Rules can vary by business type and tax activity. A single-member LLC with no employees may not need an EIN for federal income tax. Yet it may need one for payroll, certain tax filings, or a bank account. Check your case before applying.

Sole proprietors can apply even when they are not required to do so. An EIN can help keep a Social Security number off some business forms. A bank may also ask for one when you open a business account.

Here are common reasons to get an EIN:

• You hire employees or plan to run payroll.
• Your business is a corporation or partnership.
• Your bank asks for an EIN to open an account.
• You need to file certain federal tax forms.
• You want to use an EIN rather than your Social Security number on business forms.

Getting an EIN does not form an LLC or corporation. You must set up that legal structure with your state first, if that is your plan.

How to apply for a tax ID number

For many US applicants, the IRS online tool is the fastest way to get an EIN. It is free and issues the number after a successful application. The online tool has set hours, so check the IRS page before you begin.

Before applying, gather the details the form asks for. The applicant must be an owner, partner, officer, or other person with authority to act for the business. The person named as responsible party must have a valid taxpayer identification number, subject to IRS rules.

Have these details ready:

• The business’s legal name and any trade name.
• The mailing address and, if different, the street address.
• The type of business, such as sole proprietorship, partnership, LLC, or corporation.
• The reason for applying and the date the business began.
• The responsible party’s name and taxpayer identification details.
• A short description of the business and its main activity.

Choose the application method that fits your situation. The IRS explains the online route and other options on its Employer ID Numbers page.

1. Apply online: Use the IRS EIN assistant if your business and responsible party meet its rules. Complete the session in one sitting, since it cannot be saved for later.
2. Apply by fax: Fill out Form SS-4 and send it to the IRS fax number listed in the form instructions. The IRS says it generally returns a faxed EIN within four business days.
3. Apply by mail: Complete Form SS-4 and mail it to the address shown in the instructions. Allow several weeks for processing.
4. Apply by phone from abroad: International applicants may call the IRS using the number listed in the Form SS-4 instructions. They should complete the form first so they can answer each question.

Check every detail before you submit. A wrong legal name or address can cause trouble with tax records and bank checks. Save the IRS confirmation notice when it arrives.

How an EIN differs from a state tax ID

An EIN comes from the federal government. A state tax ID comes from a state agency, and its name and rules vary by state. You may need a state number to collect sales tax, pay state payroll taxes, or meet other local tax duties.

Getting an EIN does not automatically register your business for state taxes. Check with your state tax agency to learn which permits or accounts apply. A business that sells taxable goods may need a sales tax permit, while an employer may need a state withholding account.

Some states use one number for several tax accounts. Others issue separate numbers for each tax type. Keep federal and state notices in separate files so you can find the right number when filing.

Correcting or updating your EIN record

Use care when entering information on the original application. If you spot an error after you apply, contact the IRS using the details in your EIN notice or the current IRS guidance. Do not apply for a second EIN just to fix a typo.

When your business address or responsible party changes, file Form 8822-B to update the IRS record. The IRS requires a responsible party change to be reported within 60 days. The form also covers business address changes.

Send Form 8822-B to the address listed on its instructions. Keep a copy and proof of mailing with your business records. The IRS form and its instructions explain which changes to report and where to send it.

A major change in ownership or legal structure may call for a new EIN. That depends on how the business is organized and taxed. Review IRS guidance or ask a tax professional before making a new application.

Common questions about business tax ID numbers

Does it cost anything to get an EIN? No. The IRS issues EINs for free. A paid service is optional and does not make the IRS process faster.

Can I get an EIN if I am a sole proprietor? Yes. You can apply even if your business does not have employees. It may help with banking or reduce how often you share your Social Security number.

Do I need an EIN before opening a business bank account? Some banks ask for one, but their rules differ. Ask your bank what documents it needs. You may also need state registration papers or proof of your business name.

Can I apply online if I live outside the United States? The online tool has eligibility limits. International applicants who cannot use it may apply by phone, fax, or mail under IRS rules. Review the Form SS-4 instructions first.

What form do I use if the online tool is not available? Use Form SS-4 for applications by fax or mail. International applicants may also use it to prepare for a phone application.

For a mail or fax application, use the IRS Form SS-4 and its instructions. They list the current addresses and fax numbers, along with details for applicants outside the United States.