A nine-digit number assigned by the IRS that identifies a business entity for tax filing purposes. Required for all employers to file payroll tax returns, open business bank accounts, and hire employees.
Why the EIN matters for employers
The Employer Identification Number is to a business what a Social Security Number is to an individual: a unique identifier used across federal and state tax systems, banking, and government filings. Every business that pays employees must have an EIN. Single-member LLCs without employees may use their owner's Social Security Number for federal income tax purposes, but the moment they hire an employee, an EIN is required. Applying for an EIN is free and can be done online through the IRS website in minutes. The EIN is used on all federal payroll tax filings including Forms 941, 940, W-2, and W-3. It is also used on state payroll tax filings and on any 1099-NEC forms issued to independent contractors. The EIN must be included on every tax deposit made through EFTPS and on correspondence with the IRS. Banks require an EIN to open a business checking account, and most financial institutions will not process payroll ACH transactions without verifying that the EIN matches the business name in IRS records. If a business is sold, the new owner typically applies for a new EIN because the tax history and liabilities belong to the prior entity. If a business changes its legal structure, such as converting from a sole proprietorship to an LLC, it generally needs a new EIN. Employers should guard their EIN carefully because fraudulent use of EINs to file false payroll tax returns is a form of tax fraud that creates significant complications for legitimate employers.
How BEG handles Employer Identification Number (EIN) for clients
BEG Managed Payroll uses your EIN for all federal and state payroll tax filings, EFTPS deposits, and W-2 production. BEG verifies EIN information during onboarding to ensure all filings are correctly attributed to your business. Accurate EIN usage is foundational to every aspect of BEG Managed Payroll at $25-$45 per employee per month. Learn about BEG Managed Payroll.
Frequently asked questions
How do I apply for an EIN?
Apply online at irs.gov through the EIN Assistant tool. The application takes about 10 minutes, and you receive your EIN immediately upon completion. You can also apply by fax or mail using Form SS-4, but those methods take significantly longer.
Is an EIN the same as a tax ID number?
Yes. EIN and tax ID number (TIN) are often used interchangeably for businesses. For individuals, the TIN is their Social Security Number or Individual Taxpayer Identification Number (ITIN). For businesses, the TIN is the EIN.
Can a sole proprietor use their Social Security Number instead of an EIN?
A sole proprietor without employees may use their SSN for federal income tax purposes, but must obtain an EIN if they hire any employees, open certain retirement plans, or have a Keogh plan. Using an SSN as the business tax ID also creates privacy exposure on documents like 1099s that circulate to vendors.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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