An Employer Identification Number, or EIN, is a nine-digit number the IRS assigns to identify a business for federal tax purposes. Think of it as a Social Security number for your company. If you are starting a business, you will very likely need one, and the best part is that the IRS issues EINs free of charge.

Here is what an EIN is used for, when you need one and how to get it without paying anyone.

What an EIN is used for

Your EIN shows up in many places once your business is running. Common uses include:

  • Opening a business bank account. Most banks ask for an EIN to open an account in the business’s name.
  • Filing federal tax returns and other IRS forms for the business.
  • Hiring employees and running payroll.
  • Working with vendors and clients who need your tax information for their records.
  • Applying for business credit and licenses.

Using an EIN instead of your Social Security number on business paperwork also helps keep your personal information more private.

Do you need one?

Whether an EIN is required depends on how your business is set up and what it does. In general, businesses that have employees, operate as corporations or partnerships, or file certain types of tax returns need one. Many single-owner LLCs and sole proprietors choose to get one even when it is not strictly required, because banks and clients often ask for it.

The IRS website has an explanation of who needs an EIN. Your CPA can confirm the right answer for your situation, especially if you are unsure how your business will be taxed.

Why it’s free, and the sites that charge anyway

The IRS does not charge for an EIN. Yet many websites look official and offer to “process” your EIN application for a fee. Some of these sites use government-style designs and names that make them easy to mistake for the IRS.

To protect yourself:

  • Apply directly at IRS.gov. Type the address yourself rather than clicking an ad in search results.
  • Be wary of any site that asks for payment to obtain an EIN.
  • Do not share your Social Security number or business details with a site you cannot confirm is legitimate.

A business formation service may include getting your EIN as part of a package, which is fine as long as you understand what you are paying for. The EIN itself never costs anything.

How to apply

The process is straightforward when you have your information ready:

  1. Form your business first. If you are creating an LLC or corporation, file with the state before applying, so the EIN matches your legal business name and structure. In Florida, an LLC costs $125 to file with Sunbiz and a for-profit corporation costs $70.
  2. Gather your details. The IRS will ask for your business’s legal name, address, structure, the reason you are applying and information about the person responsible for the business.
  3. Apply on IRS.gov. The IRS offers an online application, along with other application methods described on its website.
  4. Save your confirmation. Download or print the EIN confirmation notice and store it with your formation documents. Banks and others may ask to see it.

Double-check the spelling of your business name and the structure you select before submitting. Correcting errors later takes more time than getting it right the first time.

What to do after you have your EIN

With your EIN in hand, you can take the next steps toward running a well-organized business:

  • Open a dedicated business bank account and keep personal spending out of it.
  • Set up bookkeeping from the start.
  • Check with your city, county and any state licensing agency about local business tax receipts or professional licenses.
  • Consider requesting a free D-U-N-S Number from Dun & Bradstreet if you plan to build business credit.
  • Put your Florida annual report window, January 1 to May 1, on your calendar.

We can help you get set up

If you would like help with the whole startup process, our business formation service handles Florida LLC and corporation filings for a $100 service fee plus state fees, and we will point you to the official IRS application for your free EIN. Once you are up and running, our bookkeeping services can help you keep clean records from day one.

Start on the right foot

Getting your EIN is one of the simplest steps in starting a business. If you have questions about the rest, book a free consultation or call (772) 356-3550.

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