Applying for an Employer Identification Number (EIN)

Just like a Social Security Number (SSN) is used to track and report personal tax and credit information, the Employer Identification Number (EIN) is used to track and report business tax and credit information.

A business owner can apply for an EIN by completing and submitting an Application for Employer Identification Number (IRS Form SS-4). This document asks for all of the pertinent information about a business, including the legal name of the entity (or individual); the trade name of the business; the mailing address; the name of the principal officer, general partner, grantor, owner, or trustor; the type of entity; reason for applying; the date the business was started or acquired; the highest number of employees expected in the next 12 months; the first date that wages or annuities were paid; and the principal line of merchandise sold or services provided.

Once the EIN has been obtained, it can be used immediately for the purposes of opening a bank account, applying for a business license, and filing a tax return by mail.

NOTE: No matter which method is used to generate an EIN, it can take up to two weeks to become part of the IRS’s permanent records. Taxpayers must wait until that happens before filing an electronic return, making an electronic payment, or using any system that utilizes the IRS Taxpayer Identification Number matching program.)

When to Apply for a New EIN

Since an EIN is the primary number that is used to track all business transactions, it is important to remember to request a new EIN if there are significant changes to your business.

• If the business is organized as a Sole Proprietorship, a new EIN is required if the business is subject to a bankruptcy proceeding, is incorporated, takes in partners and operates as a partnership, purchases or inherits an existing business that is operated as a Sole Proprietorship. A Sole Proprietorship is NOT required to obtain a new EIN if the name of the business is changed, the location changes (or other locations are added), or operates multiple businesses.
• If the business is organized as a Corporation, a new EIN is required if the Corporation receives a new charter from the Secretary of State, is a subsidiary of a Corporation using the parent’s EIN or becomes a subsidiary of a corporation, changes to a partnership or a sole proprietorship, or a new corporation is created after a statutory merger. A new EIN is NOT required for a Corporation if it is a division of a Corporation, the surviving Corporation uses the existing EIN after a Corporate merger, a Corporation declares bankruptcy, the Corporate name or location changes, a Corporation chooses to be taxed as an S corporation, or reorganization of a corporation changes only the identity or place.
• If the business is organized as a Partnership, a new EIN is required if it is incorporated, the Partnership is taken over by one of the partners and is operated as a Sole Proprietorship, or an old Partnership is ended and a new one is begun. A new EIN is NOT required for Partnerships if the partnership declares bankruptcy, the Partnership name changes, the location of the partnership is changed or other locations are added, a new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B), 50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1), or multiple businesses are operated under an existing Partnership Agreement.
• If the business is organized as a Limited Liability Company (LLC), a new EIN is required if a Corporation files papers with the state to convert to an LLC and will use the default classification of Partnership. An LLC is NOT required to acquire a new EIN if a Corporation files papers with the state to convert to an LLC and will elect via Form 8832 to be taxed as a Corporation, the number of members in the LLC changes from more than one member to a single member, the number of members in the LLC changes from a single member to more than one member, or a Sole Proprietor files papers to become a state recognized entity, organizes as an LLC, and will file Form 8832 or Form 2553 to elect to be treated as a disregarded entity or taxed as a Corporation or Small Business Corporation.