How to Get an EIN for Your Ecommerce Business
An employer identification number (EIN) allows your ecommerce business to open business bank accounts, charge sales taxes for goods, and file income tax returns. Although EINs aren’t necessary for all businesses, they provide benefits that can make it easier to run your company.
In this article, we explore why an EIN is essential to your ecommerce business, how to get an EIN, and what to expect along the way.
What is an EIN?
An EIN is a free, nine-digit number issued by the IRS to certain U.S.-based businesses. Much like a nine-digit Social Security number (SSN) identifies an individual, the EIN is used to identify businesses. For example, the IRS uses the EIN for tax administration purposes for businesses that are required to file business tax returns. EINs, along with SSNs, fall under the broader bracket of Taxpayer Identification Numbers.
You may be required to apply for an EIN for your business if you pay wages, contribute to a self-employment retirement plan, operate as a partnership or corporation, or are required to have an EIN for other tax-filing purposes, like filing employment or fiduciary taxes.
Reasons to get an EIN
Businesses that operate as corporations or partnerships are required to have an EIN. However, even if your business type isn’t required to submit an EIN application for tax purposes, the IRS will grant your business an EIN upon request. You can use your EIN to unlock several business-related benefits, outlined below.
- Filing business taxes: If your ecommerce business is required to pay employment, excise, fiduciary, or alcohol, tobacco, and firearms taxes, an assigned EIN will associate your tax return with your business entity.
- Charging sales taxes: If your ecommerce business sells goods out of certain states, it might need an EIN as part of the state’s business regulations to charge sales taxes. For example, in Virginia, business sellers must register with the state using a federal EIN to collect sales taxes.
- Vendor relations: Other businesses and vendors might require your business EIN to enter into contracts with your business. They may also need your EIN for tax filings if the vendor is required to issue you an IRS tax form for payments it has made to your business, like Form 1099-MISC.
- Preventing identity theft: Sharing your SSN for business-related purposes puts your personal identity and assets at risk of theft. Using an EIN as an alternative can help safeguard your identity.
- Opening a business bank account: Certain products and services for businesses are only available to entities with an EIN. For example, business banking products like business checking, business credit cards, payroll, and accounting services all require an EIN to open an account.
- Establishing credit: Like your personal credit history, your business can establish a credit profile. Credit bureaus track your business’s credit history, which is linked to your EIN.
Before applying for an EIN
Have the following details on hand before submitting an EIN application to make the process easier.
- Business name: This is the legal name of the business that’s requesting an EIN. Make sure you have the correct spelling, including corporation suffixes, like “Inc.” or “LLC.” If you’re a sole proprietor, enter your full name where it asks for the legal name of your entity.
- Business type: Determine which type of business best describes your entity. There are many business entity types, including sole proprietorships, partnerships, corporations, nonprofit organizations, and estates.
- Founding date of your business: You’ll need the month, day, and year that your business was started, or the date you first acquired the business.
- Primary industry: Be ready to select a description that most accurately describes your business’ main industry. Options include construction, real estate, and food service. You can also write in an industry.
- Number of employees: You’ll need to know how many employees you expect to have on your payroll over the next 12 months.
- Tax ID of responsible party: Every EIN application requires the name and tax ID—whether an SSN, individual tax identification number (ITIN), or EIN—of the main person who owns or has control over the business entity.
How to get an EIN
The IRS offers several ways to apply for an EIN that serve all business owners, from those who are digitally savvy to those who prefer conventional methods, like fax, mail, or phone.
If you’re looking for the fastest option and have a U.S.-based business, apply for an EIN online. Before getting started, check that your entity is eligible for an EIN. For example, your primary business location must be within the U.S. or U.S. territories to be eligible, and the responsible party—the person who either owns or controls the business—must have a valid taxpayer identification number.
The EIN online application uses EIN Assistant, a five-step application tool. This tool is accessible Monday through Friday from 7 a.m. to 10 p.m. EST.
It’s important to have all of the EIN application details ready, because you'll need to complete the form and submit it in one sitting—you can’t save your application as you go. The session also times out after 15 minutes of inactivity for security purposes. If your session expires, you’ll need to start the process over again.
After submitting your application, you’ll receive a confirmation along with your EIN, which you can download or print for your records.
You can apply for an EIN via fax by completing and printing out IRS Form SS-4 and sending it to the IRS fax number assigned to your location.
For entities within the 50 U.S. states or the District of Columbia, fax your paper EIN application to 855-641-6935. Entities that aren’t located in a U.S. state but are faxing documents within the country can fax their application to 855-215-1627. If sending the fax from outside the U.S., send your form to 304-707-9471.
If you’d like the IRS to send your EIN via fax, include your return fax number with your transmission.
Another option is to submit your completed application by mail. If you’re located in one of the 50 states or the District of Columbia, mail your paperwork to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Entities that aren’t located in a U.S. state should mail paperwork to:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Once the IRS processes your application and determines that you’re fit for an EIN, you’ll receive your number in the mail.
Overseas applicants who don’t have a location in the U.S. can call 267- 941-1099 to apply for an EIN number. Operating hours are Monday through Friday, 6:00 AM to 11:00 PM EST.
The call must be placed by either the party responsible for the entity or an authorized third-party designee who must answer additional questions. To make this process go smoothly, fill out Form SS-4 in advance so you can easily relay the information to the IRS representative over the phone.
How long does it take to get an EIN?
The amount of time it takes to get an EIN varies depending on how you submit your application. If you need an EIN assignment immediately, submitting your application online might be your best option. Here’s a timeline of when to expect to get an EIN.
Securing an EIN for your ecommerce business is a necessary step to setting up several aspects of your business operations, including opening financial business accounts, registering your business in your state, and charging sales taxes for your goods.
Although it can take up to two weeks for your new EIN to get recorded with the IRS permanently, you can start using it for most business functions as soon as you receive it. The best part—they're completely free.