Employer Identification Number (EIN): What it is and how to get one

Starting a business in the U.S., even a sole proprietorship, will likely require an Employer Identification Number. Here’s what it is and how to apply for one.

What is an EIN?

An Employer Identification Number, or EIN, is a nine-digit number issued by the IRS to identify a business for federal tax purposes. It functions similarly to a Social Security number, but for a business rather than an individual, and is generally required to open a business bank account, hire employees, or file certain types of business tax returns.

How to apply for an EIN step by step

1. Confirm one is needed. Most business structures beyond a very simple sole proprietorship with no employees will need an EIN, and even sole proprietors often choose to get one to keep business and personal finances separate.

2. Gather business information. This includes the business name, structure, and the responsible party’s information.

3. Apply directly through the IRS. The IRS’s own EIN tool⁠(opens in new window) confirms this application is free and can typically be completed online in one session, provided a valid Taxpayer Identification Number is on hand; the session expires after 15 minutes of inactivity.

4. Receive the EIN immediately upon completion for most online applications, or by mail or fax if applying through an alternative method.

5. Save the confirmation letter. The EIN will need to be referenced repeatedly for banking, tax filing, and other business purposes.

Common mistakes with EINs

• Paying a third party to obtain an EIN. Applying directly through the IRS is free, so any service charging a fee for this step is charging for something that can be done at no cost.

• Losing the EIN confirmation letter. If this happens, the IRS can help retrieve the EIN, but it takes extra time that can be avoided by keeping the original document somewhere secure.

• Assuming a Social Security number⁠(opens in new window) is required to apply. Immigrants without an SSN can still apply for an EIN using an alternative process.

Record-keeping tip

Save a digital copy of the EIN confirmation letter alongside the original, since a bank, lender, or accountant will ask for it repeatedly. Storing it in the same place as other core business documents, like formation paperwork, avoids a scramble to locate it under time pressure.

EIN and international business payments

Immigrants starting businesses in the U.S. can obtain an EIN regardless of immigration status, which removes a common misconception that stops some prospective entrepreneurs from starting the process. This matters for anyone operating an immigrant-owned business⁠(opens in new window) with international clients or suppliers, since an EIN is typically required to open the U.S. business bank account used to send and receive those international payments.

Having an EIN also supports building business credit separate from personal credit, since business accounts and credit relationships are generally tied to the EIN rather than the owner’s personal identification, which matters over time when accessing financing for the business.

Why an EIN doesn’t replace an SSN or ITIN entirely

An EIN identifies a business for tax and banking purposes, but it doesn’t replace an owner’s own personal Social Security number or ITIN⁠(opens in new window), which remain necessary for individual tax filing. Some new business owners mistakenly assume an EIN eliminates the need for personal tax identification, but the two serve distinct, non-overlapping purposes.

Using an EIN to open a business bank account

Most banks require an EIN to open a dedicated business bank account, an important step for keeping business and personal finances separate, which in turn makes bookkeeping, tax filing, and demonstrating business legitimacy to a lender considerably more straightforward than commingling both in a single personal account.

What to do if you lose your EIN confirmation letter

Misplacing the original EIN confirmation letter generally means requesting a verification letter directly from the IRS, or locating the number on a prior tax return or a bank document where it was previously used, rather than needing to apply for an entirely new EIN.

Why a sole proprietor might still want an EIN

Even a sole proprietor without employees, who technically could use their own Social Security number for business purposes, often benefits from getting an EIN anyway, since it helps separate business identity from personal identity and is generally required to open a dedicated business bank account.

In Summary

An EIN is one of the first practical steps in formalizing a U.S. business, and the good news for immigrant entrepreneurs is that obtaining one doesn’t depend on immigration status or require a Social Security number. Once in hand, an EIN opens the door to a business bank account, business credit, and the ability to send and receive international payments through formal business channels.

This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.