An employer identification number (EIN), also known as a federal tax ID number, is a nine-digit number used by the Internal Revenue Service to identify a business for taxation purposes. An EIN gets assigned to the business when Form SS-4 is filed with the IRS. A banking institution uses an EIN to identify a company for banking purposes. Most business structures have an obligation to get an EIN from the IRS.
A sole proprietorship exists as a business owned and operated by one individual. Sole proprietorships that do not have employees do not need an EIN. However, a sole proprietorship that takes taxes from income paid to a non-resident alien must get an EIN, as explained on the IRS website. Furthermore, a sole proprietor who files tax returns for items such as alcohol and firearms must acquire an EIN, even if no employees work for the business. Sole proprietors who do not have employees can use their Social Security number for business purposes.
Limited Liability Company
A limited liability company (LLC) owned and operated by a single member, with no employees, does not have to get an EIN, as long as the LLC elects taxation as a sole proprietor. A single-member LLC that elects to get taxed like a corporation must get an EIN from the IRS, despite having no employees. When an LLC elects taxation as a corporation, the company will have to file a tax return and pay taxes on the company's net income as a business entity, just like a regular corporation. LLCs with more than one member must obtain an EIN, even if the company does not have employees.
Partnerships and corporations without employees still have a requirement to get an EIN, even in the case of a corporation owned and operated by a single shareholder. A single-member LLC owner or a sole proprietor without employees, that does not want to use his Social Security number for business, can acquire an EIN from the IRS in the same fashion as any other entity.
Getting an EIN
The IRS website allows businesses to apply for an EIN online, or owners can call the IRS business and specialty tax line at 800-829-4933 to get an EIN over the phone. Information about the business must be provided, such as the date when the company began, the purpose for running the business, as well as the name, address and Social Security number of an authorized representative. The IRS assigns an EIN to the company for immediate use at the conclusion of the telephone or online interview.