Spec notes
- The IRS issues EINs for free, online, usually in minutes; you never need to pay a third party for one.
- If you are forming an LLC, partnership or corporation, the IRS says to register it with the state before applying for an EIN.
- You generally need a new EIN when you change ownership or structure, but not when you change only the business name or address.
Once your business exists, the next number you need is the employer identification number, or EIN. The IRS describes it as a federal tax ID number for businesses, tax-exempt organizations and other entities. Banks ask for it, the Texas Comptroller asks for it, and you will put it on payroll and tax forms for as long as the business runs. Getting one is free and quick, if you do it in the right order.
Who needs an EIN
According to the IRS, you need an EIN if, among other things, you:
- have employees;
- operate as a partnership or a corporation;
- will need to pay employment, excise, or alcohol, tobacco and firearms taxes;
- withhold taxes on income other than wages paid to a non-resident alien;
- operate certain trusts, retirement plans and other entities.
A sole proprietor with no employees and no excise taxes may not need an EIN for federal purposes. The IRS adds that if you do not need an EIN for federal tax purposes, you can still request one for banking or state tax purposes, but EINs are not intended for other activities such as state tax lien auctions, sales or lotteries.
Step 1: Form the entity first
The IRS is explicit: if you are creating a legal entity such as an LLC, partnership or corporation, register it with your state before you apply for an EIN. Otherwise your application may be delayed. In Texas that means filing your certificate of formation with the Secretary of State; see Forming an LLC in Texas: Form 205 Step by Step. When you apply, enter the business name exactly as it appears on your formation documents.
Step 2: Apply online, for free
The IRS online tool lets you get an EIN directly from the IRS in minutes, for free. If your application is approved, the EIN is issued immediately online. A few practical points from the IRS:
- The session expires after 15 minutes of inactivity, and you must start over, so have your information ready.
- You must be the responsible party in control of the entity, or its authorized representative; a third-party designee needs signed authorization.
- You need the responsible party’s Social Security number or individual taxpayer identification number.
- If your principal place of business is outside the U.S., or you cannot apply online, you can apply by phone, fax or mail.
Tip: Save or print the confirmation notice the IRS shows when your EIN is issued. Banks and the Comptroller may ask to see it, and replacing it later takes a phone call.
Don’t pay for a free number
The IRS issues EINs for free, directly, in minutes. There is no reason to pay anyone to apply on your behalf; if you use a representative, the IRS requires signed authorization for a third-party designee.
When you need a new EIN
The IRS says that, in general, you need a new EIN when you change your entity’s ownership or structure. You do not need a new EIN if you only change your business name or address.
| Situation | New EIN? |
|---|---|
| Business name or address changes only | No |
| Ownership or structure changes | Generally yes |
| Single-member LLC must file excise or employment taxes | The LLC needs its own EIN |
| An existing LLC is terminated and a new corporation or partnership is formed | Yes |
Check the IRS’s “When to get a new EIN” page for your entity type before you restructure.
After you have it
- Open a business bank account in the business’s legal name using the EIN.
- Register with the Texas Comptroller for a sales tax permit if you sell taxable goods or services; see Texas Sales Tax Permits for New Businesses: Who Needs One and How It Works.
- Use the EIN on Form W-9 when clients ask for your taxpayer identification number.
- If you hire, the EIN goes on payroll filings; see Hiring Your First Employee in Texas: The Federal and State Checklist.
If you lose it
If you forget your EIN, the IRS suggests checking old tax returns or bank records, or calling its business and specialty tax line to request a Letter 147C confirming the number previously assigned. Eligible users of the IRS Business Tax Account can also download a digital confirmation notice.
Use the right name and the right person
The IRS asks you to enter the business name exactly as it appears on your registration or formation documents. The responsible party is the person who controls the entity; the IRS needs that person’s SSN or ITIN, and a third-party designee needs signed authorization. Getting these right avoids mismatched records with the Comptroller, your bank and the IRS later.
The bottom line
Form your Texas entity first, then apply for your EIN free on irs.gov, using the exact legal name. Keep the confirmation, use the EIN for banking and tax registrations, and get a new one only when ownership or structure changes. Next: The Texas Franchise Tax for Startups: Who Files, Who Pays and When.