Do You Need an EIN? Requirements, Exceptions, and Costs

Do you need an EIN? You do if your business has employees, is organized as a corporation, partnership, or multi-member LLC, files excise or certain other federal returns, or operates as a trust, estate, or nonprofit. A sole proprietor or single-member LLC with none of those triggers can use a Social Security Number instead, though many still apply for an Employer Identification Number for banking and privacy reasons.

The number itself is free, permanent, and issued by the IRS to identify a business for federal tax purposes.¹ Whether you’re required to have one comes down to two questions: what your business does, and how it’s legally organized.

Activities That Require an EIN

Internal Revenue Code Section 6109 sets out when an identifying number is mandatory.²³⁴

Payroll isn’t the only activity that requires one. Other triggers include:

Paying a household employee such as a nanny, housekeeper, or caretaker cash wages of $3,000 or more in 2026.⁵
Paying $2,500 or more total for farmwork in a year, or $150 or more to any single farmworker, which puts you on the hook for Form 943.⁶
Filing federal excise tax returns. Form 720 (quarterly excise taxes) and Form 2290 (heavy highway vehicle use tax) both require an EIN; a Social Security Number is not accepted.⁷
Operating a trust, an estate, or a nonprofit. Each generally needs its own EIN for filing returns and reporting to beneficiaries.²
Sponsoring a Keogh plan or other qualified retirement plan.

Business Structures That Require an EIN

Your legal structure can require an EIN on its own, even with no employees and no active income. Corporations and partnerships must have one to meet their federal tax filing obligations.⁸

Multi-member LLCs are classified as partnerships for federal income tax purposes unless they elect corporate treatment by filing Form 8832, so they need their own EIN too.⁹

Single-member LLCs are treated differently. For income tax purposes they’re disregarded entities, and the owner generally uses a Social Security Number on filings. But a single-member LLC still needs its own EIN if it has employees or files excise tax returns; for those purposes the IRS treats the LLC as a separate entity from its owner.¹⁰

One boundary worth flagging: electing S-corporation status by filing Form 2553 does not require a new EIN. An existing corporation, LLC, or partnership keeps the number it already has.¹¹

When a Sole Proprietor Can Skip It

A sole proprietor with no employees, no excise tax filings, and no qualified retirement plan is not required to get an EIN. You can report your business income on your personal return using your Social Security Number as the taxpayer identification number.⁸ The IRS does not mandate an EIN in this situation, though a lot of solo operators still choose to get one.

Reasons to Get One Anyway

Practical needs push many businesses to apply even when nothing in the tax code forces it.

Banking is the usual first reason. Most banks require an EIN to open a business checking or savings account, and federal anti-money-laundering rules require financial institutions to collect a taxpayer identification number when opening an account for a legal entity.¹² An EIN also helps you build a business credit profile that stands apart from your personal credit history, which matters for loans and vendor credit.¹³

Then there’s paperwork from clients. Anyone who pays you $600 or more for services needs your taxpayer identification number to file Form 1099-NEC, and if you don’t provide a valid number the payer must apply backup withholding to your payments.¹⁴ Using an EIN on your W-9 instead of a Social Security Number keeps your personal identifier off documents that circulate widely, which is a meaningful identity-theft protection step if you work with many clients.

How to Get an EIN

Applying is free directly through the IRS. Watch out for third-party sites that charge for the service; you can do it yourself in minutes.¹

The IRS online EIN application is the fastest option for domestic applicants and issues the number immediately on screen when your application is approved. The system limits you to one EIN per responsible party per day. The IRS also mails an official confirmation notice (CP 575) to the address on your application.⁸

If you can’t use the online tool (for instance, you’re an international applicant without a U.S. address), you can fax a completed Form SS-4 and generally get the number back within four business days, mail Form SS-4 and wait about four weeks, or, for applicants outside the United States only, call 267-941-1000.¹⁵¹⁶

The application asks for the entity’s legal name and any trade name, mailing and physical addresses, the entity type and reason for applying, a description of the principal business activity, and the name and Social Security Number (or ITIN) of a responsible party. The responsible party has to be a natural person who owns or controls the entity, not another business, with a narrow exception for government entities.¹⁷

When a Change Forces a New EIN

An EIN is permanent for the entity it’s assigned to, but certain structural changes require a new one. The dividing line is ownership or legal form: a change to either usually means a new EIN, while renaming, relocating, or electing S-corporation status does not.¹¹

You’ll need a new EIN if you’re a sole proprietor who incorporates, forms a partnership, or files for bankruptcy; a corporation that gets a new charter from the secretary of state, converts to a partnership or sole proprietorship, or merges to create a new corporation; a partnership that incorporates or is taken over by one partner operating as a sole proprietor; or an LLC that terminates and reforms as a corporation or partnership. A single-member LLC that starts filing employment or excise taxes also needs its own EIN at that point.

Renaming or moving your business, surviving a corporate merger, or converting a partnership to an LLC that continues to be taxed as a partnership do not require a new number.

The Cost of Skipping It

Operating without a required EIN doesn’t carry a standalone penalty, but it blocks you from filing the returns you’re supposed to file. You can’t submit employment tax returns, issue correct W-2s, or complete 1099-NECs without one, and each late or incorrect information return carries its own penalty that scales with how late you are, reaching $340 per return after August 1 for returns due in 2026 and $680 per return for intentional disregard, with no cap on the intentional-disregard tier.¹⁸ Those add up quickly across a payroll or contractor roster, which is the practical reason to apply as soon as you know you need one.

1
Internal Revenue Service. Employer Identification Number
2
Office of the Law Revision Counsel. 26 USC 6109 – Identifying Numbers
3
Internal Revenue Service. Instructions for Form 941 (Rev. March 2026)
4
Internal Revenue Service. About Form 944, Employer’s Annual Federal Tax Return
5
Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees
6
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
7
Internal Revenue Service. Instructions for Form 2290 (07/2025)
8
Internal Revenue Service. Get an Employer Identification Number
9
Internal Revenue Service. LLC Filing as a Corporation or Partnership
10
Internal Revenue Service. Single Member Limited Liability Companies
11
Internal Revenue Service. When to Get a New EIN
12
FFIEC BSA/AML Manual. Assessing Compliance with BSA Regulatory Requirements – Beneficial Ownership Requirements for Legal Entity Customers
13
U.S. Small Business Administration. How to Build Business Credit Quickly: 5 Simple Steps
14
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
15
Internal Revenue Service. Instructions for Form SS-4 (12/2025)
16
Internal Revenue Service. Contact My Local Office Internationally
17
Internal Revenue Service. Responsible Parties and Nominees
18
Internal Revenue Service. Information Return Penalties