Do I Need a Tax ID Number for My Business?
An employer identification number (EIN), also called a tax ID number or taxpayer ID, is required for most business entities. As its name implies, this is the number used by the Internal Revenue Service (IRS) to identify businesses with respect to their tax obligations. Whether you need a tax ID number will primarily depend on whether you have employees. The following information will help you decide whether your business needs an EIN.
Tax ID Numbers at a Glance
A tax ID number is not required if you operate a sole proprietorship or an LLC with no employees, in which case you would simply use your own Social Security Number as a tax ID. But you must obtain an EIN if you are a sole proprietor who files pension or excise tax returns. Even partnerships without non-partner employees are required to have tax ID numbers.
Additionally, there are certain instances where you will need to obtain a new EIN (See "Do You Need a New EIN?" from the IRS for more details):
- Existing business is obtained (either through a purchase or inheritance) by someone who plans to run it as a sole proprietorship
- Business changes from a sole proprietorship to a corporation or partnership
- Business changes from a partnership to a corporation or sole proprietorship
- Business changes from a corporation to a partnership or sole proprietorship
- Individual owner dies, and business is taken over by the estate
Getting an Employer ID Number
You may apply for a tax ID online, via telephone, by fax, or through the mail -- but doing it online will save you time.
- Online: This the preferred method for obtaining a tax ID number, available for all business entities whose principal office or legal residence is in the U.S.
- Telephone: Call the Business & Specialty Tax Line at (800) 829-4933 between 7:00 a.m. and 7:00 p.m. (local time), Monday through Friday. International applicants must call (267) 941-1099.
- Fax: Complete Form SS-4 (PDF) and fax it to the appropriate IRS number. The IRS will send a return fax with your tax ID within four business days.
- Mail: Complete Form SS-4 (PDF) and send it to the appropriate IRS address. Your EIN will be mailed to you.
Foreign Nationals: Individual Taxpayer Identification Number
For those who do not have a Social Security Number -- such as nonresidents and resident aliens -- they may need to apply for an individual taxpayer identification number (ITIN), which is also nine digits. To apply, you'll need to file Form W-7: IRS Application for Individual Taxpayer Identification Number. You will be asked to provide proof of your legal resident or visitor status and will have to file it through an "Acceptance Agent" authorized by the IRS.
Get Tax Help for Your Small Business By Contacting an Attorney
Unless you operate a sole proprietorship or an LLC with no employees, you will most likely need a tax ID number for your small business. The best way to learn about tax ID numbers, and other aspects of business tax law, is to speak with a skilled tax attorney near you.