Who needs an EIN?
A quick rundown of which small businesses are required to have an EIN, and which ones simply benefit from one.
Direct answer
You generally need an EIN if your business has employees, is a corporation or partnership, files certain federal tax returns, or withholds taxes for non-wage income paid to a non-resident. Many other small businesses choose to get one to keep their personal SSN private.
Simple explanation
The IRS requires an EIN in specific situations, but the practical reasons go beyond requirements. Even when an EIN isn't strictly required, having one separates your business identity from your personal identity and is often required by banks, payroll providers, and clients.
Who typically needs (or wants) an EIN
- 1
Businesses with employees
Required, regardless of business structure.
- 2
Multi-member LLCs, partnerships, and corporations
Required by the IRS.
- 3
Single-member LLCs and sole proprietors
Not always required, but commonly obtained to open a business bank account or avoid sharing an SSN with clients.
- 4
Freelancers issued many 1099s
An EIN can be given to clients in place of an SSN on a W-9, reducing exposure of personal info.
- 5
Trusts, estates, and non-profits
These entities generally need their own EIN for tax reporting.
Summary
- •Required: employers, partnerships, corporations, multi-member LLCs.
- •Optional but recommended: single-member LLCs, sole proprietors, freelancers.
- •The benefit is identity separation and easier banking.
- •When in doubt, an EIN is free and rarely a downside to have.