EIN and business registration: differences between IRS and state filings.

Oct. 12, 2025, 6:39 p.m.
Here’s a clear breakdown of the differences between EIN registration (IRS) and business registration (state filings) — one of the most misunderstood topics for new entrepreneurs and foreign business owners in the U.S.:
EIN and business registration

EIN and Business Registration: Differences Between IRS and State Filings

1. Different Purposes

Process Agency Purpose
EIN (Employer Identification Number) Internal Revenue Service (IRS – federal) Identifies your business for federal tax purposes (like a Social Security Number for your business).
Business Registration State government (usually Secretary of State) Legally forms or authorizes your business entity (LLC, corporation, partnership, etc.) to operate in that state.

2. What Each One Does

EIN (IRS)

  • Used for:

    • Filing federal taxes (income, payroll, excise).

    • Opening a business bank account.

    • Hiring employees.

    • Applying for certain licenses.

  • You apply using Form SS-4 through the IRS.

  • It’s free and issued instantly online (for U.S. residents) or by fax/mail for foreign applicants.

Business Registration (State)

  • Creates your legal business entity under state law.

  • You file Articles of Organization (LLC) or Articles of Incorporation (Corporation).

  • Involves state fees, name checks, and annual reports.

  • Must be done before or in conjunction with obtaining your EIN.

3. Legal Authority

  • State registration gives your company the legal right to exist and do business.

  • EIN gives your company a tax identity for federal reporting.
    Think of it this way:

The state “creates” your business.
The IRS “recognizes” it for tax purposes.

4. Timing

  • Generally, you should register your business with the state first, then apply for an EIN.

  • Exception: if you’re forming a sole proprietorship, you can get an EIN first since no state formation is required.

5. Fees and Costs

Process Typical Cost Paid To
EIN Application Free IRS
State Registration $50–$500+ (varies by state) Secretary of State or equivalent agency

6. Jurisdiction

  • The EIN is federal and applies nationwide.

  • State registration applies only in the state(s) where you operate.

    • If you expand into another state, you must register as a foreign entity in that state — but you don’t need a new EIN.

7. Ongoing Requirements

EIN (IRS) Business Registration (State)
File federal tax returns (Form 1120, 1065, etc.) File annual/biennial reports
Maintain IRS correspondence Maintain good standing with the state
Update IRS if ownership or structure changes Update registered agent, address, or ownership with the state

8. Common Misconceptions

  • Getting an EIN does not mean your business is legally registered.

  •  Registering your LLC or corporation does not automatically get you an EIN.

  • Both are required for a properly established, compliant business.

9. Who Handles Each

Task Agency Website
EIN Application Internal Revenue Service (IRS) irs.gov/businesses
Business Registration Your State’s Secretary of State Varies by state (e.g., sos.ca.gov, dos.ny.gov)

10. Quick Example

Scenario:
You start “Global Tech LLC” in California.

  1. You register with the California Secretary of State — now you legally exist.

  2. You apply for an EIN with the IRS — now you can pay taxes and open a bank account.

Two separate steps, but both essential.