An Employer Identification Number functions as your business’s “Social Security Number” and establishes its legal and financial identity with the U.S. government. Thus, as a business owner (resident or foreign) in the country, you must acquire one.
An EIN is crucial for opening a bank account, processing payments via platforms like Stripe or PayPal, hiring employees, and filing federal tax returns. If you're interested in obtaining it, read our guide.
What is an Employer Identification Number?
An EIN is a nine-digit identification number (formatted as XX-XXXXXXX) issued by the Internal Revenue Service (IRS). It is otherwise called the Federal Tax Identification Number, Federal Employer Identification Number (FEIN), or Business Identification Number.
The EIN functions as the official tax ID for businesses, trusts, estates, and other entities. It serves as the primary ID for a business entity and is necessary for all activities, including opening an international bank account, accepting payments, or working with online platforms.
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Why Is This 9-Digit Business Identification Number Important?
Getting a business identification number offers various advantages for your venture. Here are a few to help you understand its importance better:
i) Opening Corporate Bank Accounts
Most reputable banks in the U.S. will not allow you to open a corporate bank account without a valid EIN. It is necessary to keep your personal and company finances separate; thus, you need separate bank accounts to protect your personal assets from business liabilities.
ii) Business Credibility
Having an FEIN allows you to apply for licenses and permits. It also signals to vendors and partners that your business is a legitimate and registered entity.
iii) Hiring Employees
If you plan to hire employees, you must have an EIN. It allows you to set up payroll, withhold federal and state employment taxes, and offer employee benefits such as health insurance and other retirement plans.
Who Needs an Employer Identification Number?
You generally need an EIN if you hire staff, pay certain business-related taxes (such as excise or alcohol and tobacco taxes), or withhold taxes on income paid to foreign individuals. For a more precise breakdown of who must have one, see the summary table below.
Types of Business Entities
Is an EIN Required?
When Do They Need It
Corporations (C corp or S corp)
Yes
Required for all corporations, regardless of size or number of employees
Sole Proprietorship
Yes
If it hires employees
Partnerships
Yes
Required for all partnerships (General or Limited)
Multi-Member LLCs
Yes
Required as soon as the LLC has more than one owner
Single-Member LLCs
No
Single-member LLC EIN requirements depend on the number of employees, excise taxes, and practical business needs.
Trusts & Estates
Yes
Required for most irrevocable trusts and estates that earn income.
Note: It is not essential for certain grantor-owned revocable trusts
Non-Profit Organizations
Yes
Required to apply for tax-exempt status and file annual returns
How to Apply For an EIN For U.S. Residents and Non- U.S. Residents?
Here are the simple steps you must follow to apply for an EIN:
Step 1: Identify the Company’s Location
The first step in applying for an EIN is to determine whether the business you own or operate is located in the United States or outside the United States. This distinction matters because the IRS offers different application methods depending on residency.
Step 2: Form your Business Entity
As a U.S. resident, if you’re creating a legal entity within the country (LLC, partnership, corporation), register it with your state before you apply for an Employer Identification Number.
If you already own a legal company outside the U.S., you do not need to register a new entity with a U.S. state. Instead, you simply apply for an EIN as a Foreign Entity using your existing company’s legal name and its international address.
Step 3: Check Out the Naming Rules
When naming your business for an EIN, use only letters, numbers, hyphens, and ampersands. Avoid using periods (.), slashes (/), or apostrophes ('). For example, if your venture’s name is "St. Paul LLC," use "St Paul LLC" or "Saint Paul LLC."
Step 4: Complete the EIN application process
The EIN application process varies for U.S. residents and non-residents:
If your business is based in the United States, you can obtain it online, by fax, or by mail.
If your main business is outside the U.S. or you're a foreign owner without a U.S. Social Security Number, you can get an EIN by calling the number officially registered on the IRS website. Alternatively, submit Form SS-4 by fax or by mail to IRS International Operations.
Is the EIN application free, and can I use multiple EINs?
Regardless of residency, applying for an EIN is free. Sole proprietors typically use a single EIN for all their business activities, including those done under a Doing Business As (trade or fictitious name). You don't need a separate EIN for each new shop or website you launch, as long as they are legally part of the same sole proprietorship and not registered as separate entities.
However, if you create separate legal entities (e.g., two different LLCs), each Limited Liability Company must have its own unique EIN.
Why Choose BSW?
At Business Setup Worldwide, we take the initiative of understanding the core business needs of our clients and clear the processes in a hassle-free manner. Since its inception, our business advisors have been guiding investors by providing tailored business setup solutions. If you plan to get an EIN for your business or start your business at a global level, feel free to have a word with our business expert. Contact us, and we’d be glad to assist!
Frequently Asked Questions
1. Are an Employer Identification Number (EIN) and a Social Security number (SSN) the same?
A Social Security Number (SSN) identifies a person, while an Employer Identification Number is for a business. A sole proprietor may use an SSN for tax purposes, but once the company has employees, forms a corporation or partnership, or opens a corporate bank account, an EIN is required. They are not interchangeable and should be used only for their intended purpose.
2. Are EIN numbers public?
EINs are not always publicly available, but they can be disclosed if a business voluntarily shares them in filings or documents, such as tax forms, especially for nonprofits and public companies.
3. How long does it take to get an EIN for non-U.S. residents?
According to a few government sources, getting an EIN for non-U.S. residents may take up to a few weeks.
4. Can a non-U.S. resident apply for an FEIN through the online process?
No, non-U.S. residents generally cannot apply for an FEIN online because the online portal requires a U.S. address, SSN, or ITIN.
5. Does a sole proprietorship without employees need to obtain an EIN?
No, a sole proprietorship with no employees doesn't legally require an EIN.
