What is an EIN & how to get one?

An EIN (Employer Identification Number) is a unique tax ID number assigned to your business by the IRS. It is the equivalent to your individual Social Security Number (SSN), and getting one for your business is a fairly painless and smart step to take. As a Lender I have encountered several entrepreneurs who are resistant to using an EIN instead opting to have their business use their personal social security number (SSN) as the tax ID. I have never heard a rationale for use of the personal SSN for a business that makes sense. The resistance typically is framed by the business owner that getting an EIN assigned to the business would be an undue burden, unnecessary step, would take too much time, or entails excessive costs.

I understand this position, many entrepreneurs do not want to go on a wild goose chase for yet another government identification number to keep track of. If someone is unfamiliar with the lingo/process the next step would typically be an online search for “How to get EIN for my Business” or other similarly worded search. Seeing the top results from that first search would be enough to make almost anyone want to give up. The top hits will all be sponsored paid websites with confusing names and web addresses designed to mimic the official IRS website and logo. They are designed and positioned to get clicks and take advantage of the unprepared entrepreneur. These websites are designed to make the process seem complicated, time intensive, and have costs that often range in the $200-$299 range with various add-ons and expediting options (for an additional price).

In those instances, I am pleased to inform the business owner that getting an EIN assigned should take 5-15 minutes (which is faster than any of the paid website’s expedited options), can be assigned by the IRS instantaneously, and is free. I will outline just a few of the benefits of utilizing an EIN for your business, and at the bottom of this post and provide the IRS link you need to get your EIN directly through the IRS for free .

Benefits

• Identity protection – Limiting additional uses of a personal SSN provides some identity protection
• Separation of business and personal finances – having clear differentiation of business and personal tax ID numbers helps reduce comingling for entrepreneurs.
• Hire and pay employees – It is a requirement for a business with employees. Even if you don’t have employees right now, it may save time down the road as your business grows and it becomes necessary to hire employees.
• Business Lending – Many financial institutions require an EIN for Business deposit accounts and lending.

EIN Resource

IRS - EIN YouTube Video

Steps for an EIN

Go to IRS.gov, more specifically: Apply for an EIN Online

Hopefully that saved you some time, money, and a headache!