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What is An EIN and Why Is It Important?

What is An EIN and Why Is It Important?

Published: June 15, 2016

One of the key responsibilities for many new businesses or businesses that are restructuring is obtaining an Employer Identification Number, or EIN, from the IRS.

An EIN is a unique nine-digit number that identifies your business for tax purposes. It’s similar to a Social Security number but is meant for business related items only.

As a business owner, you’ll need an EIN to open a business bank account, apply for business licenses and file your tax returns. It’s helpful to apply for one as soon as you start planning your business. This will ensure there are no delays in getting the appropriate licenses or financing that you may need to operate.

Who needs an EIN?

An EIN is needed by any business that retains employees. However, non-employers are also required to obtain one if they operate as a corporation or partnership.

Not sure whether you need an EIN? Review this guide from the IRS. If you answer yes to any of the questions in the list, you need to apply for an EIN.

As your business grows, be sure to visit the IRS website and its resources for a complete list of who needs an EIN.

How to apply for an EIN

The simplest way to apply for your EIN is online via the IRS EIN Assistant. As soon as your application is complete and validated, you’ll be issued an EIN. There is no charge for this service.

You can also apply by fax or mail. If your business is incorporated outside of the United States, you cannot apply for an EIN but you can call 267-941-1099, 6:00 a.m. to 11:00 p.m. (ET) Monday through Friday. Read more about How to Apply for an EIN and How Long Will it Take to Get an EIN?

Securing an EIN is a necessary step to establishing your business and will ultimately help in keeping your regulatory, legal and financial matters in order. 

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.