Do I Need an EIN?

Why most people need one

The IRS is not the only party that asks for a number. Banks, payment processors, clients who issue 1099s, landlords, insurers, state agencies and licensing boards all ask for a taxpayer identification number, and for a business they expect an EIN. A sole proprietor can legally give a Social Security number instead. In practice, doing so puts the SSN on every W-9 and vendor form the business ever signs, and many banks will not open a business account without an EIN regardless of what the IRS requires. That is the reason most people on this page end up applying.

When the IRS makes it mandatory

The IRS publishes a short set of questions. Answer yes to any one and an EIN is not a choice.

• Do you have employees, or will you within the year?
• Is the business a corporation or a partnership?
• Do you file employment tax, excise tax, or alcohol, tobacco and firearms returns?
• Do you withhold taxes on income, other than wages, paid to a non-resident alien?
• Do you have a Keogh plan?
• Are you involved with a trust, an estate, a nonprofit, a farmers’ cooperative, a plan administrator, or a real estate mortgage investment conduit?

That list is complete, and a sole proprietor or single-member LLC with no employees is not on it. That is exactly why, for those two, the bank rather than the IRS is usually the reason to apply.

Your situation

Single-member LLC, no employees

Bank: yes, nearly every one, to open an account in the LLC’s name. IRS: the day you hire anyone or elect corporate taxation; until then the LLC is disregarded and reports under your SSN. The full answer for single-member LLCs.

Sole proprietor, no employees

Bank and clients: usually yes, to keep your SSN off W-9s and to open a business account. IRS: the day you hire. Most sole proprietors get one for the first two reasons. When a sole proprietor needs one and why you might want one anyway.

DBA or trade name

A DBA is a name, not an entity. It never gets its own EIN. The number belongs to the person or company behind the name. How EINs and DBAs fit together.

Multi-member LLC, partnership, or corporation

Required. A multi-member LLC is a partnership for tax purposes unless it elects otherwise, and both partnerships and corporations are on the IRS list. There is no employee test; the entity type alone decides it.

Independent contractor or freelancer

Clients: they will ask for a W-9, and an EIN on it keeps your SSN out of the accounts payable department of every company you invoice. IRS: only if you hire. Most freelancers get one on the first W-9 request.

LLC for a rental property

Bank: yes, the account the rent is deposited into will need one. IRS: a multi-member rental LLC is a partnership and must have one; a single-member one becomes mandatory only once it hires.

Opening a business bank account

Every entity other than a sole proprietorship will be asked for an EIN. Sole proprietors are asked at some banks and not others. What each account type needs.

Hiring your first employee

Required, from the first hire, including a household employee such as a nanny. Payroll tax deposits and W-2s cannot be filed without it.

Trust or estate

An estate always needs one. An irrevocable trust needs one. A revocable living trust with a living grantor usually does not. EIN for a trust or estate.

Nonprofit or church

Required, and needed early: the application for tax-exempt status cannot be filed without one. EIN for a nonprofit.

Foreign owner or no SSN

Whether you need one follows the same rules. How you get one is different, because the IRS online tool needs a U.S. taxpayer number for the responsible party. EIN without an SSN and EIN with an ITIN cover it.

When one EIN is not enough

Each separate entity needs its own number. Two LLCs need two EINs even if the same person owns both. A sole proprietor with three DBAs needs one EIN, because there is one taxpayer. An executor who is also trustee of a trust created at death needs two, one for the estate and one for the trust.

Quick answers

Is there any downside to getting an EIN before the IRS requires it?

No ongoing obligation is created by the number itself. A sole proprietor with an EIN still files a Schedule C exactly as before.

Can I get an EIN without a business?

The application asks for an entity and a reason. A sole proprietorship is an entity, and it exists the moment you start doing business, so an individual can obtain one for a side business with no registration anywhere else. EIN with or without an LLC.

Does the EIN expire?

No. It is permanent to the entity it was issued to.