Does every business need a tax ID?    

There are many steps required for forming a business. When you review documents regarding how to start a business, you most likely will see something about an employer identification number, or EIN, which acts as the identification number for tax purposes with the IRS. However, it also has a purpose beyond just filing for taxes, which is why most businesses get one, even though it is not always necessary. So, do I need an EIN? Let’s find out.

Running a Business Without an EIN

If you are wondering, “do I need an EIN number,” then you might like to know that the answer is not always. For sole proprietorships and LLCs, you do not always need to have an EIN. The one caveat is that if you have employees, even as an LLC or sole proprietorship, you must have an EIN. If you are a sole proprietorship or LLC with no employees, then you can choose to use your own social security number for all instances that ask for an EIN. Partnerships and corporations, even those without employees, must have an EIN.

EINs Beyond Taxes

Although you obtain your EIN from the IRS and use it for tax purposes, you also will find you use it in other situations, especially those involved with banking and finances. You might be wondering, “can I open a bank account without an EIN?” The answer is, it depends. Many dedicated business bank accounts and lines of credits require an EIN, even for entities that might not need one. You will need to check with the individual banks and lenders to determine if you can use your social security number rather than an EIN to open your account.

There are other reasons you might wish to have an EIN even if you do not need one for your business. If you are wondering, “can I get an EIN without a business,” the answer is yes. Some non-business entities, such as trusts and estates, have an EIN to help with tax and financial purposes. If you decide to get an EIN, start the process through filing with GovDocFiling.