Definition
An EIN, or Employer Identification Number, is a nine-digit number the IRS assigns to a business to identify it for federal tax purposes in the United States. It is formatted as XX-XXXXXXX. Businesses use it on tax returns, Form W-9, payroll filings, and bank applications, and often print it on invoices.
Also called: Employer Identification Number, Federal tax ID number, FEIN
EIN in practice
Despite the name, you do not need employees to get an EIN. Corporations, partnerships, and multi-member LLCs must have one. Sole proprietors and single-member LLCs without employees can use their Social Security number instead, but many get an EIN anyway so they do not have to share their SSN with every client.
Applying for an EIN directly with the IRS is free and can usually be done online in one session. Be wary of websites that charge a fee to file the same application for you.
Clients who pay you as a contractor will ask for your EIN or SSN on Form W-9 so they can report payments to you on Form 1099-NEC when required.
Example
A freelance photographer forms a single-member LLC, gets an EIN online the same day, and gives that number on Form W-9 to every new client instead of her Social Security number.
Frequently Asked Questions
Do I need an EIN to invoice clients?
Not if you are a sole proprietor without employees, since you can use your SSN. Getting a free EIN is still recommended so your SSN stays private on W-9 forms.
Is an EIN the same as a tax ID?
An EIN is one type of US tax identification number. Others include the SSN and ITIN. "Tax ID" is the general term used across countries.
Related terms
- Tax ID A tax ID is the number a tax authority assigns to a business for reporting and collecting taxes.
- Form W-9 Form W-9 is the IRS form a US business asks a contractor or vendor to complete so it has their legal name, business type, address, and taxpayer identification number.
- Form 1099-NEC Form 1099-NEC is the IRS information return a US business files to report payments for services made to an independent contractor or other non-employee during the year.
- Sales tax Sales tax is a consumption tax added to the price of goods and some services at the point of sale, collected by the seller and remitted to the state or local government.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.