Your Employer Identification Number is the federal tax ID that lets you run a business as a business. With it, you can open a bank account in the company’s name, hire and pay employees, pay independent contractors, file federal tax returns, apply for credit and licenses, and authorize a tax professional to represent you before the IRS. The number is free from the IRS, stays with your entity for its life, and shows up on nearly every federal form you’ll ever file for the company.1Internal Revenue Service. Employer Identification Number
Open a Business Bank Account
This is usually the first thing owners do with a new EIN. Federal anti-money-laundering rules require banks to verify the identity of every legal entity opening an account, and your EIN is the key piece of that verification.2FFIEC BSA/AML Manual. Assessing Compliance with BSA Regulatory Requirements – Beneficial Ownership Requirements for Legal Entity Customers Most banks won’t open an account for a corporation, LLC, or partnership without one.
Keeping business money in its own account matters more than people realize. If you run a corporation or LLC and mix personal and business funds in one account, a court can pierce your limited liability protection and hold you personally responsible for the business’s debts. The EIN keeps the split clean: the account is in the business’s name, tied to the business’s tax ID.
When you apply, bring your IRS CP 575 notice, the one-time confirmation letter the IRS mails after assigning your EIN. If you’ve lost it, call the IRS Business and Specialty Tax Line and request a 147C verification letter. Banks accept either.
Hire Employees and Run Payroll
Hiring your first employee triggers a wave of federal reporting, and the EIN ties all of it together. Every W-2 wage statement must include your EIN in Box B so the IRS can match the wages you report to the taxes you’ve withheld, and the full nine digits are required — you can’t truncate the number on a W-2.3Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
Each quarter, you’ll file Form 941 to report federal income tax, Social Security tax, and Medicare tax withheld from paychecks, along with the employer’s matching share of Social Security and Medicare.4Internal Revenue Service. About Form 941, Employers Quarterly Federal Tax Return Filing with an incorrect EIN, or borrowing another business’s number, can trigger penalties and processing delays.5Internal Revenue Service. Instructions for Form 941 (03/2026) If your EIN hasn’t arrived by the filing deadline, you can write “Applied For” and the application date on a paper Form 941, but electronic filers must have a valid EIN before submitting.
Once a year, you’ll also file Form 940 to report Federal Unemployment Tax. Only employers pay FUTA; it’s never withheld from wages. Combined with state unemployment systems, it funds benefits for workers who lose their jobs.6Internal Revenue Service. About Form 940, Employers Annual Federal Unemployment (FUTA) Tax Return Your EIN belongs on that return as well.
Pay Independent Contractors
The EIN isn’t only for employees. When you hire a freelancer, consultant, or subcontractor, have them complete a Form W-9 to collect their taxpayer ID, and keep the W-9 on file for at least four years.7Internal Revenue Service. Forms and Associated Taxes for Independent Contractors
When you pay a contractor $2,000 or more during the year, you’re required to file Form 1099-NEC reporting the payment to the IRS. That threshold jumped significantly for 2026 (it was $600 for prior years) and will be adjusted for inflation starting in 2027.8Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026) Your EIN appears on every 1099 you issue as the payer’s ID.
File Federal Business Tax Returns
Every federal business return puts your EIN front and center. The form depends on how you’re organized:
- Partnerships file Form 1065 to report income, deductions, and each partner’s share of profits or losses.9Internal Revenue Service. Instructions for Form 1065 (2025)
- C-corporations file Form 1120 with the EIN alongside the corporation’s legal name and address.10Internal Revenue Service. Instructions for Form 1120 (2025)
- S-corporations file Form 1120-S, which follows similar identification requirements.
If you deal in taxable goods like alcohol, tobacco, or fuel, the EIN is also required on federal excise tax returns. The regulations are explicit: failing to include your EIN on an excise return can result in a $50 penalty per occurrence.11eCFR. 27 CFR Part 19 Subpart I – Requirements for Employer Identification Numbers
Authorize a Tax Professional
If you hire a CPA or enrolled agent to handle your taxes, they’ll need your EIN to file Form 2848, which gives them power of attorney to represent your business before the IRS. The form requires your business name, EIN, and address on Line 1, and the IRS uses the EIN to confirm the representative has authority to act for the company.12Internal Revenue Service. Instructions for Form 2848 Power of Attorney and Declaration of Representative
Apply for Business Credit and Loans
Using your EIN consistently on credit applications is how you start building a financial reputation for the business itself. When you apply for a business credit card or an SBA loan, lenders use the EIN to identify your company and pull its financial history. Over time, payment behavior under that EIN builds a separate business profile.
Two things to be realistic about. First, having an EIN does not automatically separate business credit from personal credit. Dun & Bradstreet, the largest commercial credit bureau, tracks business credit under its own nine-digit DUNS number, which is a different identifier. You typically need to register for a DUNS number separately to build a D&B credit profile. Your EIN identifies the business for tax purposes; the DUNS number is what many creditors, suppliers, and insurers check when evaluating creditworthiness.
Second, most small business credit cards still require a personal guarantee, meaning you’re personally on the hook regardless of whether you applied with an EIN. Corporate cards that waive the personal guarantee exist, but they typically require millions in annual revenue or substantial minimum bank balances. For most owners, the EIN gets the company’s name on the account and starts a payment track record; it does not, on its own, create a wall between you and the debt.
Apply for Business Licenses and Permits
State and local agencies often require your EIN on license and permit applications. Health departments, zoning boards, and professional licensing bodies use it to link permits to a specific business entity in their records. State revenue departments also use it when registering your business to collect sales tax.13U.S. Small Business Administration. Get Federal and State Tax ID Numbers
Many states also issue their own state tax ID, which is separate from the federal EIN. Whether you need one depends on whether your state taxes business income or requires employment tax registration. Your state’s department of revenue will walk you through the specifics, and expect to provide your EIN as part of that process.
When a Structural Change Requires a New EIN
Your EIN doesn’t necessarily follow the business through every change. The general rule: if you change ownership or structure in a fundamental way, you need a new number.14Internal Revenue Service. When to Get a New EIN The specific triggers depend on your business type:
- Sole proprietors need a new EIN if they incorporate or form a partnership. A sole proprietor forming a single-member LLC can keep the existing EIN as long as the LLC doesn’t elect to be taxed as a corporation and doesn’t have employees or owe excise tax.
- Corporations need a new EIN if they get a new charter from the secretary of state, convert to a partnership or sole proprietorship, or merge into a new entity. A corporation that survives a merger without forming a new entity keeps its existing EIN.
- Partnerships need a new EIN if they incorporate, dissolve and start a new partnership, or if one partner takes over as a sole proprietor. A simple change in partnership ownership that doesn’t terminate the partnership does not require a new number.
- LLCs need a new EIN if they terminate and form a new corporation or partnership.
Using an old EIN after a structural change means your tax filings won’t match IRS records for your current entity, which delays processing and can trigger compliance notices.
Close the Account When You’re Done
If you close the business or no longer need the EIN, you can ask the IRS to deactivate it. The IRS technically never cancels an EIN, since the number stays permanently tied to your entity, but deactivation closes the associated tax account so you stop receiving notices and filing expectations.15Internal Revenue Service. If You No Longer Need Your EIN
To deactivate, send the IRS a letter with your entity’s EIN, legal name, address, a copy of the original EIN assignment notice if you still have it, and the reason for deactivating. The IRS won’t process the deactivation until you’ve filed all required returns and paid any outstanding taxes.16Internal Revenue Service. Closing a Business Skip this step and you can get surprised by penalty notices years later for unfiled returns on an entity you thought was already gone.