EIN Guide: Why It's Free and How to Get One

An Employer Identification Number, or EIN, is a nine-digit federal tax identification number issued by the IRS to identify a business entity — functionally, the business equivalent of a Social Security Number. It's what a bank asks for to open a business account, what payroll systems use to report employee wages, and what the IRS uses to track a business's federal tax filings and payments. Despite the name, you don't need actual employees to need one; "Employer" is a legacy label from when the number was created primarily for payroll purposes, and its use has expanded well beyond that.

It's tied to the entity, not the owner

Once issued, an EIN belongs to that specific business entity. If you form a new LLC or corporation, it generally needs its own new EIN — you can't simply reuse a number from a previous business you owned, even if you're the same person behind both.

The IRS issues EINs at no cost, directly, through its own online application. There's no government fee anywhere in the process. The confusion comes from the number of paid services — some of them legitimate filing companies, some of them sites explicitly designed to look like a government portal — that charge a fee to "obtain" an EIN on your behalf. What you're paying for in that case is convenience at best, and at worst you're paying for something the government hands out free to anyone who applies directly.

How to tell the difference

A legitimate IRS application happens on the IRS's own official site and produces an EIN confirmation letter immediately upon completion, for a same-day number if applied online. If a site is charging a fee and doesn't make clear that the number itself is free from the government, that's worth a second look before entering any payment information.

Most entities beyond a sole proprietorship with no employees need an EIN, and even sole proprietors often choose to get one anyway. Specifically, you generally need an EIN if the business:

• Has any employees, now or planned
• Is taxed as a corporation or partnership (which includes most multi-member LLCs)
• Withholds taxes on income paid to a non-resident
• Operates a Keogh plan, or certain types of trusts, estates, or nonprofits

A single-member LLC with no employees can sometimes use the owner's Social Security Number instead for tax purposes — but nearly every bank requires an EIN to open a business account regardless, since a business account under a personal SSN undermines the very liability separation the LLC was formed to create.

The process is short, and doing it directly avoids any third-party fee entirely.

1. Confirm your entity is formed first. The IRS wants your legal business name and formation details to match what the state has on file, so it's best to apply after your formation document is filed and approved, not before.

2. Go to the IRS's own EIN application. The application is free and, for U.S.-based applicants with a valid Social Security Number or Individual Taxpayer Identification Number, is available online with an EIN typically issued the same session.

3. Answer the entity questions. You'll confirm the entity type, the reason you're applying (usually "started a new business"), and basic identifying information about the responsible party — generally an owner or principal officer.

4. Save the confirmation letter. The IRS generates an official confirmation (Form CP 575 for a new EIN) immediately. This document is what banks and other institutions will ask to see, so keep a copy somewhere durable.

The most common — and most avoidable — EIN mistake is paying a third-party site to "process" an application that would have been free directly from the IRS. This isn't always a scam; some legitimate business-formation services bundle EIN acquisition into a formation package as a convenience. But it's worth knowing, going in, that the underlying number itself never has a government cost attached, so any fee you're paying is purely for someone else doing the five-minute application on your behalf.

International applicants

Owners without a Social Security Number or ITIN can still get an EIN — the process just moves from the instant online tool to a phone or mail/fax application, and takes longer. It's still handled directly with the IRS at no government cost, even though the process is less immediate.

Once issued, the EIN becomes the number your business uses to open a bank account, apply for business licenses, file federal tax returns, and set up payroll if you hire. It also typically appears on your operating agreement or bylaws, contracts, and any formal business documentation going forward. If the responsible party or business address changes significantly down the line, the IRS has a process for updating that information — the EIN itself doesn't change, but keeping the associated details current avoids mismatches when the IRS or a bank checks the record.