EIN (Employer Identification Number)
An EIN, or Employer Identification Number, is the nine-digit federal tax ID the IRS assigns to a business, in the format XX-XXXXXXX.
An EIN identifies one legal employer, not a brand, a location, or a department. You use it to file employment tax returns, deposit payroll taxesPayroll tax. Payroll tax is the umbrella term for every tax an employer calculates, withholds, or owes because it paid wages.Click to open the term, and issue Forms W-2Form W-2. Form W-2 is the annual wage and tax statement you give employees and file with the Social Security Administration, reporting wages paid and taxes withheld.Click to open the term and 1099 under that employer. You apply through the IRS, most commonly online at IRS.gov or by filing Form SS-4, and there is no fee. An EIN is separate from a state tax ID. Many states require their own registration for state income taxState income tax. State income tax is a tax most U.S. states withhold from wages in addition to federal income tax, each with its own rate and form.Click to open the term withholding and state unemployment tax.
When does a business need more than one EIN?
A business operating through more than one legal entity needs a separate EIN for each one. Each EIN carries its own tax accounts, filings, and reporting, since agencies track liability per EIN, not per brand. Tax filings use the legal name matched to the EIN, even when every sign and invoice shows a trade name (DBA).
| SITUATION | EIN |
|---|---|
| Separate subsidiaries or franchise companies | A separate EIN for each |
| Parent and subsidiary with shared ownership or brand | Not shared automatically |
| Sole proprietorship converting to a corporation | Generally a new EIN |
| Registering a DBA | No new entity and no new EIN |
| Consolidated multi-entity reporting | Taxes still reconciled per EIN |
| Sole proprietor with no employees | Can sometimes use a Social Security number instead |
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.