Getting Your EIN and State Registrations

What Is an EIN?

An Employer Identification Number (EIN) is a nine-digit number the IRS assigns to your business. Think of it as a Social Security Number for your business. It is also called a Federal Tax Identification Number.

You use your EIN to:

Open a business bank account
File federal tax returns for your business
Hire employees
Apply for business licenses and permits
Establish business credit
Apply for business loans or lines of credit

Who Needs an EIN?

You are required to have an EIN if you:

Have employees
Operate as a corporation or partnership
File certain tax returns (employment, excise, or alcohol/tobacco/firearms)
Withhold taxes on income paid to a non-resident alien
Have a Keogh plan

You should get an EIN even if you are not required to. Using an EIN instead of your Social Security Number on invoices, W-9 forms, and vendor applications protects your personal identity and looks more professional.

How to Get Your EIN

Option 1: Online (Recommended)

The IRS has a free online application at irs.gov. It is the fastest method:

Go to the IRS EIN application page
Answer questions about your entity type, responsible party, and reason for applying
Submit the application
Receive your EIN immediately upon completion

The online application is available Monday through Friday, 7 a.m. to 10 p.m. Eastern Time. The "responsible party" must have a valid U.S. Taxpayer Identification Number (SSN or ITIN).

Option 2: Fax

Complete Form SS-4 and fax it to the IRS. You will receive your EIN within four business days.

Option 3: Mail

Complete Form SS-4 and mail it to the IRS. Processing takes four to six weeks. There is almost no reason to use this method.

Option 4: Phone (International Applicants)

If you are calling from outside the U.S., you can apply by calling (267) 941-1099 during business hours.

Important: Do not pay anyone to get you an EIN. The process is free and takes less than 10 minutes online. Services that charge $50-$200 for EIN filing are taking your money for something you can do yourself in the time it takes to drink a cup of coffee.

After You Get Your EIN

Once you have your EIN, keep the confirmation letter (CP 575) in a safe place. You will need it to open your bank account and for various registrations. If you lose it, you can call the IRS Business & Specialty Tax Line at (800) 829-4933 to retrieve it, but that process is slow.

State Tax Registrations

Your EIN handles the federal side. Now you need to register with your state. The specific registrations depend on your business activities and location, but here are the most common:

State Income Tax / Withholding Tax

If your state has an income tax and you have employees, you need to register with your state's department of revenue (or equivalent) for employer withholding tax. This is the account you will use to remit state income taxes withheld from employee paychecks.

Sales Tax Permit

If you sell taxable goods or services, you need a sales tax permit (also called a seller's permit or sales tax license). Not every state has a sales tax — Alaska, Delaware, Montana, New Hampshire, and Oregon do not. Whether your specific services are taxable varies by state. In many states, construction labor is taxable; in others, it is not. Check your state's rules.

Unemployment Insurance Tax

If you have employees, you must register with your state's unemployment insurance program. In most states, this means creating an account with the state workforce or employment security agency and paying state unemployment tax (SUTA) on employee wages.

Workers' Compensation

Most states require businesses with employees to carry workers' compensation insurance. Some states run a state fund; others require you to purchase from a private insurer. A few states (Texas, for example) do not mandate it for most employers, but going without is a serious risk.

Business Licenses and Permits

Beyond tax registrations, most businesses need one or more licenses or permits. The requirements depend on your industry, location, and business activities.

City or County Business License

Most cities and many counties require a general business license to operate within their jurisdiction. Fees typically range from $25 to $500 annually. Some cities base the fee on your business revenue.

Professional or Trade Licenses

Many industries require specific licenses:

General contractors: State contractor's license (usually requires passing an exam and showing proof of experience and insurance)
Electricians, plumbers, HVAC technicians: State or local trade licenses
Engineers, architects: Professional engineering or architecture license
Real estate agents: State real estate license

Specialty Permits

Depending on your business, you may also need:

Home occupation permit — if you run your business from home
Sign permit — to put up business signage
Health permits — for food service or certain health-related businesses
Environmental permits — for businesses that handle hazardous materials
Building permits — for construction work

How to Find Your Requirements

There is no single national database of all license and permit requirements. Here is how to figure out what you need:

SBA License and Permit Tool — sba.gov has a tool that helps identify federal, state, and local requirements based on your business type and location.
Your state's Secretary of State website — lists state-level requirements.
Your state's department of revenue — for tax registrations.
Your city and county websites — for local business licenses.
Your industry association — trade associations often publish licensing requirement guides.

Keeping Track of Renewals

Most business registrations, licenses, and permits have renewal dates. Create a calendar or spreadsheet tracking:

Registration or license name
Issuing authority
Account or license number
Expiration date
Renewal cost
Renewal process (online, mail, etc.)

Operating with an expired license can result in fines, inability to enforce contracts, or even criminal penalties in some jurisdictions. Do not let renewals slip.

Common Mistakes

Paying for a free EIN. The IRS does not charge for EINs. Do not pay a third party.
Using your SSN on business documents. Get an EIN and use it instead.
Skipping state registrations. Operating without required tax registrations can lead to penalties, interest, and back taxes.
Not getting the right licenses. Working without a required contractor's license can void your contracts and expose you to lawsuits.
Ignoring local requirements. City and county licenses are easy to overlook but enforced through inspections and complaints.

Bottom Line

Getting your EIN is the easy part — it is free and takes 10 minutes. The harder part is figuring out all the state and local registrations, licenses, and permits your specific business needs. Take the time to research your requirements, register properly, and track your renewal dates. It is not glamorous work, but it keeps you legal and protects your right to do business.