What an EIN is
An EIN identifies a business or other entity for federal tax purposes. It is different from a state formation number and different from an individual Social Security number.
Common reasons a business needs one
The IRS lists situations such as hiring employees, operating a partnership or corporation, paying certain excise or sales-related federal taxes, or changing certain business structures or ownership. Other organizations and plans can also need EINs.
Form the entity first when applicable
If you are creating a corporation or LLC, the IRS instructs applicants to form the entity through the state before applying for the EIN. This helps keep the legal entity information consistent across records.
The IRS does not charge an EIN fee
The IRS warns that you never have to pay a fee for an EIN. Eligible domestic applicants can use the IRS online process; businesses with a principal place of business outside the U.S. follow different IRS application methods.
Keep the confirmation letter
Save the EIN confirmation with your permanent company records. Banks, payroll providers, tax professionals, and other business partners may ask for it later.