What it is
An EIN is a nine-digit federal tax identification number issued by the IRS to identify your business. It functions like an SSN, but for your company.
Facts
- Formatted as XX-XXXXXXX (nine digits).
- Issued free directly by the IRS. Beware paid third-party filing services.
- Required for corporations, partnerships, and businesses that hire employees. Many banks also require one to open a business bank account, while requirements for sole proprietors vary.
- Online applicants (with a valid US taxpayer ID) typically receive an EIN immediately.
Who it's for
US corporations, partnerships, employers, and businesses whose banks require an EIN. Requirements for sole proprietors vary.
How it helps you
An EIN lets you separate business and personal finances, open a bank account, hire, and stay compliant with US tax filing. This is foundational admin for a startup that needs an EIN.
Caveats
Don't pay third parties for something the IRS provides free. Non-US founders without an SSN/ITIN must apply by fax/mail, which takes longer.
Conclusion
An EIN is basic but essential plumbing. If your business needs one, get it free from the IRS after forming your entity so you can bank, hire, and file taxes.
