Glossary · Legal & Admin
What is Employer Identification Number (EIN)?
Definition
An employer identification number (EIN) is a nine-digit number issued by the IRS that identifies your business for tax purposes.
Why it matters
Think of an EIN as a Social Security number for your business. You generally need one if you hire employees, form an LLC with more than one member, or operate as a corporation, and it is often required to open a business bank account.
Even sole proprietors with no employees often get one to avoid giving clients their personal Social Security number on tax forms. Applying is free directly through the IRS website and typically takes a few minutes online. Beware of sites that charge $200 or more for something the IRS gives away at no cost.
Requirements depend on your structure and situation, so confirm with an accountant.
Common mistakes
- !Paying a third-party website a fee to obtain an EIN.
- !Losing track of the EIN confirmation letter, which you need for banking and taxes.
Frequently asked questions
What is Employer Identification Number (EIN)?
An employer identification number (EIN) is a nine-digit number issued by the IRS that identifies your business for tax purposes.
What mistakes do beginners make with EIN?
Paying a third-party website a fee to obtain an EIN. Losing track of the EIN confirmation letter, which you need for banking and taxes.
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