Whether you are self-employed with no employees or operate an organization employing thousands, a Federal Employer Identification Number (EIN) is used to identify your businesses for tax purposes.
The Internal Revenue Service (IRS) requires that all businesses that hire employees and all corporations and limited liability companies (LLC) apply for a Federal Employer Identification Number (EIN) for tax purposes. An EIN may also be required to obtain a business license from your local government and to open a business banking account. You can apply for an EIN with the IRS free of charge either by telephone, fax, mail or online (see References).
While sole proprietors are not required to have an EIN, sole proprietors may have multiple businesses under the same EIN. Sole proprietors only require a new EIN if they have filed for bankruptcy, are planning to incorporate, change to a partnership business entity or purchase or inherit another sole proprietorship business.
Corporations require a new EIN if they receive a new charter from the secretary of state, operate as a subsidiary to a corporation, change to a partnership or sole proprietorship or are merging with another company.
Partnerships require a new EIN if they are planning to incorporate, change to a sole proprietorship or end one partnership to start another.
The owners of LLCs are known as members. LLCs with employees must have two EINs: one assigned to the owner and another assigned to the LLC. Effective January 1, 2009, a new EIN is required if a single member LLC has been filing taxes under the owner, and there is no EIN assigned to the LLC. New EINs are also required for new multimember LLCs, single LLCs who have chosen to be taxed as a corporation or S corporation and new single LLCs paying excise taxes after January 1, 2008, or paying employment taxes after January 1, 2009.
