What is an EIN and Why Do I Need One?

"An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online" (EID IRS, nd). You can even get it immediately.

One question I am often asked is "Do I need an EIN?" Here is a list of question that will help you determine if you need an EIN.

Do you have employees?
YES NO

Do you operate your business as a corporation or a partnership?
YES NO

Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
YES NO

Do you withhold taxes on income, other than wages, paid to a non-resident alien?
YES NO

Do you have a Keogh plan?
YES NO

Are you involved with any of the following types of organizations?

• Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
• Estates
• Real estate mortgage investment conduits
• Non-profit organizations
• Farmers' cooperatives
• Plan administrators

YES NO

If you are unsure, please contact a tax advisor to get you on the right path. 

References: 

Employer ID numbers. Internal Revenue Service. (n.d.). https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers#:~:text=An%20Employer%20Identification%20Number%20(EIN,to%20identify%20a%20business%20entity.