Question:  When does a business need an Employer Identification Number (EIN)?

Answer:  It depends.  (That is often the answer to tax-related questions….)

What is an EIN?

An EIN is a 9-digit identifying number for employers, similar to a Social Security Number.

How do I Know if I Need an EIN?

If your business is a sole proprietorship, you don’t need an EIN unless you have employees you need to file excise tax returns.

All other types of business entities, such as partnerships and corporations, need an EIN.  Estates, trusts and retirement plans also need EINs.  (Note about retirement plans:  you will need separate EINs for your business and your retirement plan.)

What if I Form a Single-Member LLC and am Taxed as a Sole Proprietorship?

You don’t need an EIN if you are a single-member LLC taxed as a sole proprietorship, unless you have employees or file excise tax returns.

For Further Reading:

 

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”