EIN Number for Small Business: How to Get One

The short version: An EIN is a nine digit number the IRS gives your business so it can hire people, open a bank account, and file taxes without you handing out your own Social Security number. You can get one free, directly from the IRS website, in about 15 minutes, and anyone charging you £50 or $75 to "process" it for you is selling you something you can do yourself for nothing.

What an EIN is

EIN stands for Employer Identification Number. It's also called a Federal Tax ID Number. The IRS issues it, and it works a bit like a National Insurance number does in the UK, except it's attached to your business rather than to you personally. If you're a sole trader working alone with no employees, you might not strictly need one. If you plan to hire anyone, open a business bank account, apply for a business loan, or set up as an LLC or corporation, you will need one. Most banks won't open a business account without it.

Here's the bit that trips people up: an EIN doesn't make your business legal. It doesn't register your business name, it doesn't give you a trademark, and it doesn't protect your personal assets. It's purely a tax identification number. People assume getting an EIN is the big legal milestone that turns their side hustle into a "real" business. It isn't. Forming an LLC with your state is the step that creates legal separation. The EIN just follows that.

Who needs one

• You've formed an LLC, partnership, or corporation
• You plan to hire employees, even one part-time person
• You want to open a business bank account (most banks require it)
• You're setting up a solo 401(k) or Keogh retirement plan
• You file excise, alcohol, tobacco, or firearms tax returns
• You withhold taxes on income paid to a non-resident

If none of that applies and you're a sole proprietor with no employees, you can legally run your business using your own Social Security number. Plenty of freelancers do this for years. But I'd still get an EIN anyway, and here's the plain reason why: the moment you start handing your SSN to every client who needs a W-9 from you, you've put that number into dozens of filing cabinets and inboxes you have no control over. An EIN lets you keep your SSN private and still get paid.

The actual step-by-step

Say you run a candle-making business from your spare room in Austin, Texas. You've just filed paperwork to form an LLC and now you need an EIN to open a business bank account. Here's exactly what you do:

1. Check you're eligible. Your business has to be located in the US or its territories, and you need a valid SSN, ITIN, or existing EIN to apply as the "responsible party."
2. Go to IRS.gov directly. Search "apply for an EIN" and use the IRS's own online tool. Do not use a third-party site that charges a fee. The IRS never charges for this.
3. Apply online between 7am and 10pm Eastern Time, Monday to Friday. This is a odd restriction but it's real; the online system shuts outside those hours.
4. Fill in the form in one sitting. The session times out after 15 minutes of inactivity, and if you have to start again you'll be issued a different EIN than the one you abandoned halfway through, which causes confusion later.
5. Answer the questions about your entity type. For our candle-maker, that's "Limited Liability Company." You'll need to say whether it's single-member or multi-member.
6. Get your EIN immediately. At the end of the online session, the number appears on screen. Download and save the confirmation letter (the CP 575) as a PDF right then, because the IRS doesn't resend it easily.
7. Use it the same day. You can open a bank account, apply for a business credit card, or file for a reseller's permit straight away.

If you're outside the US and don't have an SSN or ITIN, you can't use the online tool. You'll need to apply by phone, fax, or mail using Form SS-4, which takes longer: phone applications (for international applicants) get you a number the same day, fax takes about four business days, and mail can take four to five weeks. If you're setting up a US LLC from the UK or Israel to work with American clients, budget for that longer timeline and don't leave it until the week before you need to invoice someone.

A worked example that shows where people go wrong

Imagine a web designer in Manchester who sets up a Delaware LLC to bill US clients in dollars. She applies for her EIN by fax because she has no SSN or ITIN, using Form SS-4. On the form there's a field for "responsible party," and she lists her business partner instead of herself because he happened to fill in the form. Eighteen months later she tries to change the banking details on the account and the IRS won't speak to her about it, because she's not the responsible party on file. She has to file Form 8822-B to change it, which adds weeks to something that should have taken a phone call.

The lesson: the responsible party field isn't a formality. It should be the person who controls the business and its funds, usually you, not your accountant, not your co-founder who happened to be nearest the laptop, and definitely not a lawyer who helped you file. Get this right the first time.

The uncomfortable bit nobody mentions

Most guides on this topic make getting an EIN sound like the finish line. It isn't. An EIN on its own does nothing for your business. I've seen people treat applying for an EIN as a productive afternoon's work when what they needed to do was find their first client. It's fifteen minutes of admin, not a growth strategy. Do it, tick it off, and move straight back to the work that brings in money. The businesses that struggle aren't the ones with a slow EIN application, they're the ones who spend three weeks perfecting their paperwork and never send a single invoice.

Once the admin's sorted, the real question is what systems you build around it, how you track whether your spending returns anything, and whether the tools you're paying for earn their keep. If you're bringing in AI tools once the business is formally set up, it's worth reading how to measure ROI on AI tools in a small business before you commit to a subscription you won't use past month two.

Common mistakes with EIN applications

• Applying before the LLC is formed with the state. You need your state filing confirmed first in most cases, otherwise your EIN application can get flagged.
• Using a third-party "EIN filing service." These sites often charge $50 to $300 for something the IRS gives away free in 15 minutes. Some are legitimate registered agents bundling other services, but plenty are just middlemen adding a markup to a free government form.
• Losing the confirmation letter. Banks and lenders ask for the CP 575 constantly. If you've lost it, you request an EIN verification letter (147C) from the IRS instead, which takes longer and usually requires a phone call.
• Applying for a new EIN every time you rebrand. Changing your business name doesn't require a new EIN in most cases. Changing your entity type, from sole proprietor to LLC for example, usually does.
• Giving the wrong responsible party, as in the Manchester example above.

What to do with your EIN once you have it

Open the business bank account first, same week if you can. Separating business and personal money from day one saves you hours at tax time and makes your bookkeeping believable if the IRS ever asks questions. Then set up your accounting software with the EIN attached, apply for a business credit card if you need one, and if you're going to hire anyone, register for state unemployment insurance using the same number.

If part of your plan is building marketing systems now that you're set up, it's worth thinking early about customer communication too. A lot of small businesses skip SMS entirely because it feels complicated to set up, but the mechanics of how SMS marketing works for small businesses are simpler than most people assume once you've got your business identity sorted on paper.

What it costs, what it doesn't

Getting the EIN itself costs nothing if you apply directly with the IRS. What costs money is everything around it: forming the LLC with your state (fees range roughly from $50 in Kentucky to $500 in Massachusetts), a registered agent if you need one ($100 to $300 a year), and your accountant's time setting up your books. Don't let a company upsell you an EIN as part of a "business formation package" without checking what you're paying for versus what you could do yourself for free in 15 minutes.

When an EIN changes down the line

You generally need a new EIN if you change your business structure (sole proprietor to corporation, for instance), if you're a corporation that becomes a subsidiary of another company, or if you inherit a business and operate it as a new entity. You don't need a new one for a simple name change, a change of business address, or opening new locations under the same entity. If you're unsure, the IRS has a specific page listing these scenarios and it's worth five minutes to check before you apply for a number you don't need.

I have written more around this on the site: How SMS Marketing Works for Small Businesses: The Numbers, the Mistakes, and What I'd Do Differently, How to Measure ROI on AI Tools in a Small Business: The Real Numbers, The Realistic ROI on AI Implementation for a Small Business (With Real Numbers).

For the rest of the series, see the AI for Small Business: 25 Plain-English Guides to Automation, Marketing, Sales and Admin.

Frequently asked questions

How long does it take to get an EIN number?

If you apply online directly through the IRS and you have a US SSN or ITIN, you get your EIN immediately, the same session. By fax it takes about four business days, and by mail it can take four to five weeks.

Is an EIN the same as a tax ID number?

Yes, EIN and Federal Tax ID Number mean the same thing. It's different from an ITIN (Individual Taxpayer Identification Number), which is issued to individuals, not businesses.

Can I get an EIN number for free?

Yes, always. The IRS issues EINs at no cost through its official online application. Any site charging a fee for the EIN itself, rather than for broader business formation help, is charging you for something the government gives away free.

Do sole proprietors need an EIN?

Not legally, if you have no employees, you can use your Social Security number instead. But getting a free EIN anyway means you're not handing your SSN to every client who sends you a W-9, which is worth the 15 minutes on its own.