Employer Identification Number (EIN) – Definition, Who Needs It, and How to Get It

An Employer Identification Number (EIN) is a unique nine-digit number issued by the United States Internal Revenue Service (IRS) to identify a business for taxation purposes. It is also known as a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number. Similar to how a Social Security Number identifies an individual in the United States, an EIN is used to identify a business in tax returns, payroll records, business banking activities and official communications with the IRS.

This guide explains what an EIN is, who requires one, how to apply for it through the IRS, how it differs from a Taxpayer Identification Number (TIN), and the equivalent identifiers used in India—such as PAN, GSTIN, and TAN—which perform similar business identification and tax-compliance functions under Indian regulations.

An Employer Identification Number (EIN) is a nine-digit number, formatted as XX-XXXXXXX, issued by the IRS to businesses operating in the United States. It serves as a unique tax identifier, recognising the business as a separate legal and tax entity from its owners. Corporations, partnerships, Limited Liability Companies (LLCs), non-profit organisations, trusts, estates and sole proprietors with employees use an EIN to file federal tax returns, manage payroll obligations and open business bank accounts.

Once issued, an EIN remains permanently linked to that business. It is never reused or reassigned to another entity, even if the business ceases operations. Although the IRS may close the associated business account, the EIN itself remains permanently assigned and cannot be issued to any other business.

What is a State Employer Identification Number?

Even if your business already has an EIN from the central government, you might also need to get a separate one from the state. Many businesses are required to have a State Employer Identification Number (State EIN) for each state where they pay taxes. In some cases, it can also help protect against identity theft, especially for sole proprietors.

• Since tax rules can differ from one state to another, business owners should check the local rules to see if they need a State EIN and how to apply for it.

  
  

Employer Identification Number example

An EIN is formatted as XX-XXXXXXX. For instance, an example of an EIN might be 12-3456789. This number helps the IRS track the business's tax obligations and filings. It's unique to each business and once issued, it is never reissued or reused by the IRS, ensuring that each business's financial and tax history is distinctly maintained under this unique identifier.

• Tax compliance and filing — Serves as the business's identification number for all federal tax returns, filings and correspondence with the IRS.
• Employing staff — Required for reporting payroll, withholding employment taxes and meeting federal employer obligations.
• Opening business bank accounts — Most US banks require an EIN before allowing a business to open a dedicated bank account.
• Establishing business credit — Helps create a credit profile for the business that is separate from the owner's personal credit history.
• Maintaining legal separation — Supports the distinction between the business and its owner, particularly for liability and compliance purposes.
• Obtaining licences and permits — Many business licences, registrations and permits in the United States require an EIN as part of the application process.

• Protecting personal identity — Allows sole proprietors to use an EIN on business documents instead of their Social Security Number (SSN), helping to reduce the exposure of personal information.

  
  

Who is required to obtain an EIN from the IRS?

Entities that must obtain an EIN include:

• Incorporated entities under the Company Act, 2013.
• Partnership practices including Limited Liability Partnerships (LLPs).
• Sole proprietors who employ others.
• Trusts, involved in trading or business activities.
• Estates with operational business activities.
• Non-profit organizations and charitable trusts.
• Any business entity that registers for excise, alcohol, or tobacco operations.

If you once had a business identification number but cannot find it, you do not need to apply for a new one. Instead, try these methods:

• Look for any official notices or documents you received from the Income Tax Department when you applied for your PAN or GSTIN. These notices serve as confirmation that your business ID number was issued
• Contact the banks or financial institutions where you have used the number. If you used it to open a business account or apply for a loan, they should still have the number on file
• Reach out to any state or local authorities where you applied for business licensing. They should be able to assist in retrieving your lost PAN or GSTIN
• Locate the tax returns you have filed using your PAN or GSTIN. Your business tax ID number will be listed on these documents

• Call the Income Tax Department or the relevant state tax authority for assistance. They can help you search for your PAN or GSTIN if you provide the necessary identifying information and prove your authorisation to access the details

  
  

Closing your Employee Identification Number

Closing an EIN involves notifying the IRS to deactivate the business account linked to the EIN. This is typically done after the business has filed its final tax return and paid all owed taxes. The IRS requires a formal letter stating the reason for the closure, such as dissolution or the business ceasing operations, to finalise the process and prevent future tax liabilities.

India does not use Employer Identification Numbers (EINs). Instead, businesses operating in India are identified through different registration and tax identification numbers issued under Indian tax regulations. If you are an Indian business looking for the equivalent of a business tax identification number, the following identifiers are the most relevant:

For most Indian businesses, PAN serves as the closest equivalent to a US EIN, while GSTIN and TAN are used for specific tax compliance requirements under Indian law.