An employer identification number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) for the purpose of tax recognition and identification. Designed to simplify the filing process, EINs are a key tool for businesses when reporting taxes, opening bank accounts and applying for lines of credit.

For most businesses with employees, employers will need to obtain an EIN. Businesses not employing personnel can still choose to apply for an EIN and there are certain circumstances in which businesses are required to have one, even if they don’t have any employees. Generally, the entities that do require an EIN include partnerships, limited liability companies (LLCs), corporations, estates, non-profits and trust funds. There may be additional state and local requirements, so it’s best to check with a local business counsel to make sure you’re complying with every law requiring an EIN.

The process of obtaining an EIN is free and easy. The entire process can be completed online in a matter of minutes. Applicants are asked to provide a few pieces of information, such as their business name, the social security number of the business owner, the structure of the business (LLC, for example), and the business address. Once the form has been submitted, the IRS will assign an EIN immediately and forward it to the applicant via email.

An EIN is a key tool for businesses to efficiently manage their taxes, accounts, and credit. Moreover, in some areas, having an EIN is absolutely necessary for a business to comply with local laws and regulations and to conduct operations. Therefore, all businesses, regardless of size and scope, should strongly consider applying for an EIN. The entire process is free, fast, and requires only basic information, making it the perfect way to jumpstart business operations.