Who Needs an EIN? Complete Overview for US Businesses

Dec. 1, 2025, 4:20 p.m.
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is issued by the IRS to identify a business for tax and reporting purposes. While the term “Employer” may sound like it only applies to companies with employees, many businesses and individuals need an EIN even if they never hire anyone. Below is a complete guide explaining who must obtain an EIN, who may choose to get one, and why it matters.
EIN for US businesses

1. What Is an EIN?

An EIN is a unique nine-digit number (formatted as 12-3456789) used by the IRS to track a business’s tax obligations. It works similarly to a Social Security Number but for business activities.

2. Who Must Have an EIN?

 Corporations (C-Corp and S-Corp)

All corporations must obtain an EIN—even if they have no employees.

 Partnerships

Any partnership (general or limited) is required to have an EIN because it files Form 1065.

 Multi-Member LLCs

Any LLC with more than one member is treated as a partnership by default and must have an EIN.

 LLCs That Elect S-Corp or C-Corp Taxation

If an LLC chooses corporate taxation, an EIN is mandatory.

 Businesses With Employees

Any business hiring employees must obtain an EIN for payroll taxes and reporting.

 Estates

Estates managing assets after a person’s death require an EIN to file Form 1041.

 Nonprofit Organizations

All nonprofits (charities, churches, associations) must have an EIN regardless of activity.

 Trusts

Most trusts other than revocable living trusts require an EIN.

 Keogh or Solo 401(k) Plans

Businesses with retirement plans (Keogh/solo 401k) must get an EIN—even if the business is a sole proprietorship.

 Certain Individuals Acting as Third-Party Administrators

Examples include agents withholding taxes on nonresident aliens.

3. Who May Choose to Get an EIN (Even If It’s Not Required)?

 Sole Proprietors Without Employees

Not required, but strongly recommended because:

  • Many banks require an EIN to open a business account.

  • It separates business and personal identity.

  • Some vendors require it for 1099 filing.

 Single-Member LLCs With No Employees

They can use the owner’s SSN, but an EIN is often preferred for:

  • Banking

  • Privacy

  • Vendor compliance

  • Building business credit

 Independent Contractors & Freelancers

Not required, but using an EIN instead of SSN adds privacy and professionalism.

 Real Estate Investors

Often recommended if they:

  • Own multiple rental properties

  • Want to separate finances

  • Work with property management companies

4. Benefits of Getting an EIN

Even if not required, an EIN offers advantages:

 Protects your SSN

You avoid giving your personal number to clients or vendors.

 Helps open business bank accounts

Most banks prefer or require an EIN.

 Builds business credit

Agencies like Dun & Bradstreet track EIN-based credit profiles.

 Simplifies hiring

If business growth leads to hiring, your EIN is already in place.

5. Who Does Not Need an EIN?

You do not need an EIN if you are:

  • A sole proprietor with no employees

  • A single-member LLC with no employees, taxed as a disregarded entity

  • A trust that is revocable and uses the grantor’s SSN

However, even in these cases, many owners choose to get one.

6. How to Apply for an EIN

Getting an EIN is free through the IRS:

Final Thoughts

An EIN is essential for many U.S. businesses and beneficial for almost all. Whether you're forming a corporation, starting an LLC, hiring employees, or simply freelancing, understanding whether you need an EIN helps keep your business compliant and organized.