Who Needs an EIN Number?

Uncover which business entities require an EIN with our expertly crafted guide, providing you with the key insights to ensure your business not only complies with IRS requirements but also harnesses the full benefits of having an EIN—begin your informed journey today.

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If you’re starting a business or looking ahead to tax season, you might be wondering, “Who needs an EIN number?” That’s an important question to answer — and that’s what this guide is for.

Here, we’ll answer all the pertinent questions about EINs: what the criteria are to need one, which business types must get one, and even how to get your first EIN.

What is an EIN?

EIN stands for “Employer Identification Number,” which is a bit like a Social Security number for a business. It’s a nine-digit number that the IRS can use to easily identify a business. Many — but not all — businesses are required to get an EIN.

The IRS has a few criteria that, if met, cause a business to need an EIN:

  • The business is a corporation or partnership
  • The entity has employees and pays employment taxes (or withholds non-wage income from a non-resident alien)
  • You file any of the following federal taxes: alcohol, excise, employment, tobacco, or firearms
  • You have a Keogh plan (a type of retirement plan for small business owners)
  • The entity is involved with one of the following organizations: certain trusts, estates, real estate mortgage investment conduits, plan administrators, and farming cooperatives

There are a good number of businesses that might not be legally required to get an EIN. But many of these entities choose to get one, anyway. The primary reason is often privacy; entities that don’t need an EIN have to use their Social Security numbers on business tax returns (and perhaps others). To protect their privacy, these businesses might choose to get an EIN and use that number instead. Other businesses might need one for their business license or business bank account.

What business entities are required to have an EIN?

There are a good number of different entity types that might be required to get an EIN. Let’s walk through them.

Sole Proprietorships

Sole proprietorships may or may not be required to get an EIN. Since they only have a single business owner, they aren’t required to get one by default (as multi-owner businesses do). However, if a sole proprietor plans to hire employees, they’ll need an EIN. The same applies for any of the other IRS criteria.

Even if a sole proprietor doesn’t necessarily need an EIN for IRS reasons, they might get one anyway. That’s because many banks require you to get an EIN for a business checking account (or savings) or business loan. Other entrepreneurs get one simply to help protect themselves from identity theft. 

Partnerships

Partnerships are always required to have an EIN because they have at least two members. As a result, at tax time, they file the tax form 1065, the Partnership Return of Income. That form requires an EIN.

LLCs

LLCs (short for limited liability companies) may or may not be required to have an EIN. Multi-member LLCs (those with more than one owner) always have to get an EIN, similar to a partnership. Single-member LLCs are treated like a sole proprietorship for tax purposes, so many can choose whether or not to get an EIN. Small-scale LLCs without employees often still decide to get an EIN so they can get a business bank account.

Corporations

All corporations are required to have an EIN. It’s a simple requirement that’s clearly stated within the IRS code. This includes unique corporation types like nonprofit corporations, benefit corporations, and so on.

S Corporations

S corporation status is technically not a type of business entity; it’s a tax status business entities can elect. LLCs and corporations can elect this status if they meet certain criteria, such as having 100 shareholders (members) or fewer, only individual members (and certain qualifying trusts), and being a domestic corporation or LLC.

To apply for S corp status, a business must supply an EIN. So, you’ll need an EIN for your S corp.

How to Get an EIN

Getting an EIN is fairly easy, and unlike many business filings, it’s actually free. To get an EIN, you’ll simply file Form SS-4. This form asks for some basic information like your business address, business structure, and why you’re applying for an EIN. If you want the fastest processing, we recommend filing online. Keep in mind that the IRS will only issue one EIN per responsible party per day, so if you need more than one number you’ll have to pace yourself.

If the thought of filing an IRS form makes you nervous, our EIN filing service can help.

We can help!

Here at ZenBusiness, we understand that starting a business can feel daunting, especially with all the paperwork you have to navigate. Our LLC formation service can take away some of that hassle — and for $0, even. And if you know you need an EIN, our EIN filing service can tackle that task, too. Let us handle the red tape so you can focus on making your business thrive.

FAQs About “Who Needs an EIN Number?”

  • A good number of entities are required to get an EIN. Corporations, partnerships, and multi-member LLCs are all required to get an EIN. Single-member LLCs and sole proprietorships might need to get an EIN if they have employees or meet one of the other IRS criteria.

    Note: having a DBA doesn’t mean you’re required to get an EIN. A DBA doesn’t change your legal status, so it has no bearing on whether you need an EIN.

  • That depends. If you’re structured as a corporation or partnership, you’ll need to get an EIN even if you don’t have employees. Businesses with an individual owner and no employees might not have to get an EIN, unless they meet one of the other criteria set by the IRS.

  • An EIN is used to identify a business, usually for tax purposes. It acts like a Social Security number for the business.

  • If you’re going to apply for an EIN, you’ll primarily need information about your business: your physical address (and mailing address, if applicable), the type of entity you have, and why you’re applying for an EIN. You’ll also need a computer if you’re completing online filing or a copy of Form 1065 if you want to file by mail.

    Mail-order and fax applications take several business days to process. So if you’re in a rush, we recommend filing online.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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