An EIN (employer identification number) is your startup’s federal tax ID. You need one to open a bank account, run payroll and file tax returns. Apply as soon as your certificate of incorporation is filed. It’s free, and if you apply online you get the number immediately.
Key takeaways
- Apply right after incorporating. The IRS never charges for an EIN, so skip paid services that offer to file it.
- The responsible party is the person who controls the company’s finances, usually the CEO. It can’t be your lawyer or registered agent.
- Online applications are instant. Fax takes about four business days, and mail takes four to five weeks.
- Keep the EIN confirmation letter. Your bank will ask for it.
Why does my startup need an EIN?
You need an EIN to:
- Open a business bank account
- Hire employees and run payroll
- File the company’s tax returns
- Apply for business credit, licenses and many vendor accounts
Every corporation and multi-member LLC needs one, even before it has revenue or employees.
How do I apply?
There are three ways to apply:
- Online at irs.gov. This is fastest. You answer the SS-4 questions in an interview format and get the EIN and confirmation letter at the end. You must finish in one session (it times out after 15 minutes of inactivity). The tool is open most of the week, including weekends; check irs.gov for current hours. The IRS issues only one EIN per responsible party per day.
- By fax. Send a completed Form SS-4. The IRS usually faxes the EIN back within about four business days.
- By mail. Allow four to five weeks.
US companies can no longer get an EIN by phone.
Your lawyer or accountant can apply for you as a “third-party designee” if you sign that section of the SS-4.
Who should be the responsible party?
The responsible party is the individual who ultimately owns or controls the company and directs its money, usually the CEO or the founder who runs finance. A few rules:
- It must be a person, not a company.
- It can’t be a nominee, such as your lawyer, accountant or registered agent who has no real control.
- The responsible party must have a US Social Security Number or Individual Taxpayer Identification Number.
- It can change. Report a new responsible party to the IRS on Form 8822-B within 60 days.
How do I fill out Form SS-4?
- Line 1: Legal name. Exactly as it appears on your certificate of incorporation, including “Inc.” and punctuation.
- Line 2: Trade name. Leave blank unless you operate under a different name.
- Line 3: “Care of” name. Usually blank. Fill it in only if IRS mail should go to someone’s attention.
- Line 4: Mailing address. A US address where someone reliably gets mail. Your EIN letter and future IRS notices go here.
- Lines 5 and 6: Street address, county and state. Where the business is principally run.
- Line 7: Responsible party. Name and SSN or ITIN.
- Line 8: LLC questions. Answer only if you’re an LLC.
- Line 9: Type of entity. A C corporation checks “Corporation” and enters form number 1120, then the state of incorporation (usually Delaware), not where you’re headquartered. Choosing S corp tax status is a separate filing on Form 2553.
- Line 10: Reason for applying. “Started new business,” with the type of business, such as “Software.”
- Line 11: Date business started. For a corporation, the date the certificate of incorporation was filed. For an LLC, the formation date.
- Line 12: Closing month of accounting year. December for most startups (your initial board consent sets the fiscal year).
- Line 13: Employees expected in the next 12 months. A good-faith estimate.
- Line 14: Form 944 box. Leave it unchecked unless you expect $5,000 or less in total wages for the year.
- Line 15: First date wages paid. Your best estimate, or “N/A” if you don’t plan to pay wages yet.
- Lines 16 and 17: Principal activity and services. For example, “Other: software,” then more detail, such as “financial technology software.”
- Line 18: Has the applicant applied for an EIN before? This asks about the company, not you. A new company answers “No.”
What do I need to open a bank account?
Banks and fintech banks such as Mercury typically ask for:
- The certificate of incorporation as filed with the state
- The EIN confirmation letter (CP 575)
- The board consent appointing officers and authorizing the account
- ID for each person who will sign on the account
See What Does My Startup’s Initial Board Consent Approve?
Do I need a new EIN if I convert or change my company?
Usually yes. A sole proprietorship that incorporates needs a new EIN. An LLC that converts to a corporation often needs one too, depending on how the LLC was taxed. Confirm with your accountant before you tell the bank or payroll provider. See Converting an LLC to a Corporation.
What if I lose my EIN?
Call the IRS Business & Specialty Tax Line (800-829-4933) and ask for a 147C letter. It confirms your EIN, and banks accept it in place of the original letter.
Related: I Just Incorporated My Startup. Do I Need to Do Anything Else? · Certificate of Incorporation · Delaware C Corp Incorporation Package
