An employee identification number is a term that many new small businesses will have to learn about very quickly.

What is an employer identification number?

An employer identification number (EIN) is a nine digit number assigned by the Internal Revenue Service (IRS). An EIN is used to identify tax accounts of employers and certain others who have no employees. The IRS uses the EIN to identify taxpayers that are required to file various business tax returns.

On a conceptual level, think of an EIN as the social security number for your business. In the same way that the IRS tracks individual tax returns via a social security number, the IRS can identify and track tax consequences of a business with the EIN.

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What types of business entities need an employer identification number?
It really covers a broad spectrum of business entities that are going to have to obtain an EIN in order to operate their business.

•The sole proprietorship, which is one person who owns or operates a business
•Various types of partnerships require an EIN
•Corporations also require an EIN
•The majority of Limited Liability Companies (LLC) will require an EIN
•Nonprofit entities will require an EIN

How does someone starting a new business apply to get a EIN?

People can take simple steps to get their EIN:
•It's all run by the IRS so they are your starting point www.irs.gov
•It's best applied for online or over the phone

When we're talking about tax issues, we're really talking about general information and you can take it and apply it to a tax consultant or a lawyer.