What is EIN (Employer Identification Number)?
An EIN is a nine-digit federal tax identification number for your business, required for hiring employees and opening business bank accounts.
What Is an EIN?
An Employer Identification Number (EIN) is a nine-digit federal tax identification number assigned by the IRS to business entities. Think of it as your business's Social Security Number — it's the identifier the IRS uses to track your business's tax obligations, filings, and communications. The format is XX-XXXXXXX (two digits, a dash, then seven digits). Every business that hires employees, operates as an LLC or corporation, or is required to file certain federal tax returns must have an EIN. The One-Stop Shop: The IRS EIN application online is processed immediately and is completely free. If anyone charges you to obtain an EIN, they're charging you for something you can get for free directly from the IRS.
Do Freelancers Need an EIN?
When an EIN Is Required Hiring Employees If you pay anyone to work for your business — even part-time or temporary — you need an EIN to report wages and employment taxes. Operating as an LLC or Corporation When you form an LLC, partnership, or corporation, you generally need an EIN for the entity. Filing Excise Taxes Certain types of excise taxes (on alcohol, tobacco, firearms, environmental taxes) require an EIN. Opening a Business Bank Account Most banks require an EIN to open a business checking account, even for sole proprietors. Client 1099 Requirements Clients paying you as a business (rather than as an individual) report payments using your EIN. When an EIN Is Optional (But Often Recommended) Even as a sole proprietor using your SSN for tax purposes, you might get an EIN to: - Separate business and personal finances cleanly - Establish business credit - Avoid using your SSN on business forms and invoices - Present a more professional image to clients
How to Apply for an EIN
Online Application (Fastest) 1. Go to irs.gov/EIN 2. Click "Apply Online Now" 3. Complete the online questionnaire 4. Receive your EIN immediately upon validation The online application is available Monday through Friday, 7:00 AM to 10:00 PM EST. By Fax Complete Form SS-4 and fax it to the appropriate IRS campus. You'll receive your EIN within 4 business days. By Mail Mail Form SS-4 to the IRS. Processing takes 4-5 weeks. International Applicants Non-US residents can apply for EINs by phone or mail, with specific procedures depending on whether you have an SSN.
Form SS-4: The EIN Application
The EIN application (Form SS-4) asks for: - Legal name of the entity (for LLCs/corps) or individual name - Trade name / DBA (if different) - Type of entity (sole proprietor, LLC, partnership, corporation) - Date the business was started - Principal activity / industry - Number of employees (or "none" for most freelancers) - Whether the entity has been previously assigned an EIN
Using Your EIN
On Tax Returns - LLCs and corporations: Use the EIN on all business tax returns - Sole proprietors using an EIN: Use it on Schedule C and other business filings On Business Forms - 1099s issued to contractors - Employment tax filings (if you have employees) - Excise tax returns (if applicable) On Client Invoices Some businesses include their EIN on invoices for tax documentation purposes, especially in B2B contexts.
EIN and Business Bank Accounts
Getting an EIN is typically the first step in opening a formal business bank account. Most banks require: - EIN confirmation letter from the IRS - Articles of organization (for LLCs) or incorporation documents (for corps) - Operating agreement - Business license (if required by your state/city) Even sole proprietors who don't technically need an EIN can usually open a business checking account using their SSN, but having an EIN streamlines the process.
EIN vs. State Tax ID
The EIN is a federal identifier. Most states also require a separate state tax identification number for state-level payroll taxes, sales tax collection, or state income tax. These are separate from the EIN and applied for through your state's department of revenue.
What to Do If You Lose Your EIN
If you've misplaced your EIN: - Look at prior tax returns (the EIN is on all business tax filings) - Call the IRS Business & Specialty Tax Line: 800-829-4933 - You can also retrieve EIN via IRS online account if you have one
Bottom Line
An EIN is essential for any freelancer operating as an LLC or corporation, and highly recommended even for sole proprietors who want to separate business and personal finances professionally. Getting one is free, immediate, and straightforward — and having one makes opening business bank accounts, filing taxes, and managing business finances significantly cleaner. If you don't have one yet, the online application takes 15 minutes and gives you your number instantly.