The EIN: The First Step

An Employer Identification Number is the business's federal tax ID, issued free by the IRS. It is the business equivalent of a Social Security number and the first identifier every business credit file and bank account asks for.

Why it matters

Without an EIN, the business cannot separate its identity from yours: no business bank account, no business credit file, no vendor accounts in the company name. It costs nothing and takes minutes, so there is no reason to skip it.

Key facts

• The IRS issues EINs free at irs.gov; third-party sites charging fees for an EIN are unnecessary.
• Online EIN applications are usually issued immediately during IRS hours.
• An EIN is required for partnerships, corporations, most LLCs with employees, and any business opening most bank accounts.
• Your EIN, business name, and address must match exactly everywhere - IRS, bank, Secretary of State, vendors - or files fail to link.
• An EIN does not replace a D-U-N-S number; the two identify the business to different systems.

In practice

1. Apply at irs.gov only; save the confirmation letter (CP 575) permanently.
2. Standardize the legal business name and address now; use that exact spelling everywhere from today forward.
3. Use the EIN, never your SSN, on vendor and business applications.