Myth 1: Only Employers Need an EIN
Reality:
You don’t need to have employees to get an EIN. Many business entities—such as sole proprietorships, LLCs, partnerships, and even nonprofits—often require an EIN for tax, banking, or licensing purposes. For example, you may need one to open a business bank account or apply for certain permits.
Myth 2: An EIN Is the Same as a Business License
Reality:
An EIN is issued by the IRS for tax identification, while a business license is issued by your state or local government to allow you to operate legally. They serve completely different purposes—one for taxation, the other for regulation.
Myth 3: You Can Use Someone Else’s EIN
Reality:
An EIN is unique to each business entity and cannot be shared or used by another person or company. Using another business’s EIN can result in serious legal and tax issues, including fraud charges.
Myth 4: EINs Expire
Reality:
Once an EIN is assigned to a business, it never expires. Even if your business closes or you stop using the EIN, it remains permanently linked to that entity in the IRS system. You don’t need to renew or reapply for the same business.
Myth 5: Foreign Entrepreneurs Can’t Get an EIN Without an SSN
Reality:
Foreign business owners can obtain an EIN without having a Social Security Number (SSN). The IRS allows international applicants to apply by mail, fax, or phone using Form SS-4—you just need to indicate that you don’t have an SSN or ITIN and provide valid business documentation.
Myth 6: An EIN Protects Personal Identity Like an LLC Does
Reality:
While an EIN helps separate your business finances from personal finances, it does not create a legal shield against liability. Only forming a legal entity like an LLC or corporation provides that level of protection.
Myth 7: You Need to Pay a Third Party to Get an EIN
Reality:
Applying for an EIN is 100% free through the IRS website or by submitting Form SS-4 directly to the IRS. Many online services charge a fee for convenience, but it’s not necessary to pay anyone to obtain your EIN.
Myth 8: You Need a New EIN Every Time You Move or Change Business Names
Reality:
A simple change of address or business name does not require a new EIN. However, significant structural changes—like forming a corporation, changing ownership, or adding partners—may require a new one.
Myth 9: You Can Get an EIN for Personal Use
Reality:
EINs are intended strictly for business or organizational purposes. Individuals should use their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for personal tax matters.
Final Thoughts
Understanding how EINs work helps business owners avoid costly mistakes and unnecessary confusion. Remember—obtaining an EIN is free, permanent, and straightforward when done directly through the IRS.