What Every New Business Owner Should Know About EINs in the USA

Starting a new business comes with a long checklist—forming your company, setting up bank accounts, handling taxes, and making sure you’re compliant with federal and state laws. One of the most important (but often confusing) steps is getting an Employer Identification Number (EIN).

Whether you’re forming an LLC, corporation, or partnership—or even running a sole proprietorship—understanding EINs is critical. In this article, we’ll break down what an EIN is, why you need one, how to get one in all U.S. states, and common mistakes to avoid.

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What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS). Think of it as a Social Security Number for your business.

You’ll use it for:

• Filing federal and state taxes
• Opening a business bank account
• Hiring employees
• Applying for business licenses or permits
• Establishing business credit

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Who Needs an EIN?

Not every business legally requires an EIN—but most new businesses should get one anyway.

You must have an EIN if you:

• Hire employees
• Operate as a corporation or partnership
• File excise or pension plan tax returns
• Withhold taxes on income paid to non-resident aliens

Even if you’re a single-member LLC or sole proprietor, banks, vendors, and clients often require an EIN for contracts and payments.

Example:
Maria runs an online boutique in Texas as a single-member LLC. She has no employees, but her bank won’t open a business account without an EIN. Getting one protects her personal SSN and makes her business more professional.

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Benefits of Having an EIN

✔ Protects your personal identity – You don’t have to give out your Social Security Number for business transactions.
✔ Builds business credibility – Clients, banks, and partners see you as a legitimate business.
✔ Simplifies finances – Separate personal and business banking.
✔ Enables business growth – You’ll need one to apply for funding, credit cards, or hire employees.

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How to Apply for an EIN (Step-by-Step)

The process is the same across all states in the USA since EINs are issued at the federal level by the IRS.

1. Determine Eligibility

• Your business must be in the U.S. or its territories.
• You (the applicant) must have a valid Taxpayer Identification Number (SSN, ITIN, or existing EIN).

2. Apply Online (Fastest Option)

• Go to the official IRS website: irs.gov
• The application is free and takes about 10 minutes.
• Once complete, you’ll receive your EIN instantly.

3. Apply by Fax or Mail

• Fill out Form SS-4.
• Fax or mail it to the IRS. (Takes 4–6 weeks by mail, 4 days by fax).

4. Apply by Phone (International Applicants)

• If you don’t have a U.S. residence or SSN, you can call the IRS directly to apply.

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State Considerations for EINs

Although EINs are federal, each state may have additional requirements for using them:

• California: EIN required to pay state LLC franchise taxes.
• New York: EIN needed for both sales tax registration and employee withholding tax accounts.
• Texas: EIN required to file for state sales tax permits.
• Florida: Even sole proprietors often need an EIN to register for state business licenses.

Key Note: Every state has different licensing, sales tax, and payroll requirements—but all rely on your EIN as the identifier.

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Common Mistakes to Avoid

✘ Paying a third-party unnecessarily – Applying for an EIN is free on the IRS site. Some companies charge $75–$300 for what you can do in minutes.
✘ Applying too early – Wait until your LLC or corporation is officially formed to avoid mismatched records.
✘ Using your SSN instead of an EIN – This exposes your personal identity and makes tax separation difficult.
✘ Not updating the IRS – If your business structure or ownership changes, you may need a new EIN.

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Do You Need More Than One EIN?

No—each business entity only gets one EIN. However, if you:

• Change from a sole proprietorship to a corporation
• Add partners to your LLC
• Merge with another company

… you’ll need to apply for a new EIN.

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Key Takeaways

• An EIN is essential for most new businesses, even if it’s not legally required.
• You can apply for free through the IRS online, by fax, or mail.
• Each state uses your EIN for different tax and licensing purposes.
• Having an EIN helps protect your identity, separate business finances, and position your company for growth.

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Next Step: Let Us Handle It for You

At AllIn1BusinessServices, we make EIN registration effortless. We’ll file for your EIN, ensure it matches your LLC or corporation documents, and help you stay compliant with both federal and state requirements.

If you want to learn more about forming LLC, check out our Step-by-Step Guide to Registering an LLC in All States (With Pros, Cons & Real Examples)

✅ Official EIN Application (Free)

• IRS EIN Assistant (online application)
  👉 https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
  • Available for all U.S. states and territories.
  • Open Monday–Friday, 7 AM–10 PM EST.
  • Instant EIN issuance if you apply online.

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📄 Other IRS Application Methods

Phone (International Applicants only): +1-267-941-1099

Fax Application: Form SS-4 → https://www.irs.gov/pub/irs-pdf/fss4.pdf

Mail Application: Send Form SS-4 to IRS (takes 4–6 weeks).