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

The IRS issues over 5 million EINs per year. It is one of the most fundamental steps in establishing a legitimate business, and it costs absolutely nothing.

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.

EIN Requirements by Entity Type

Entity Type	EIN Required?	Notes
Sole Proprietor (no employees)	No, but recommended	Can use SSN, but EIN protects identity
Sole Proprietor (with employees)	Yes	Needed for payroll tax filings
Single-Member LLC	No, but recommended	Required if LLC has employees or elects S-Corp
Multi-Member LLC	Yes	Always required for partnership tax returns
S-Corporation	Yes	Required for corporate tax returns and payroll
C-Corporation	Yes	Required for corporate tax returns and payroll
Nonprofit	Yes	Required before applying for tax-exempt status
Partnership (any type)	Yes	Required for Form 1065 filing

How to Get Your EIN

Option 1: Online (Recommended)

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

1. Go to the IRS EIN application page
2. Answer questions about your entity type, responsible party, and reason for applying
3. Submit the application
4. 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).

Step-by-Step: The EIN Online Application

Here is exactly what the IRS online application asks:

Step 1 — Identify the entity type. Select from sole proprietor/individual, LLC, corporation, partnership, S-Corp, trust, estate, church, nonprofit, or other. Choose carefully — the wrong selection can create complications later.

Step 2 — Select LLC classification (if applicable). For LLCs, you specify the number of members (single or multi-member). This determines default tax treatment.

Step 3 — Reason for applying. Common reasons include "started new business," "hired employees," or "banking purposes." Select the one that best matches your situation.

Step 4 — Responsible party information. Enter the name and SSN/ITIN of the "responsible party" — the person who owns or controls the entity. For a single-member LLC, this is you. For corporations, this is typically the principal officer.

Step 5 — Business details. Enter the legal name, trade name (DBA), address, state of formation, and date the business started.

Step 6 — Additional information. Specify the type of business activity, whether you expect to hire employees, expected highest number of employees, first date wages will be paid, and the closing month of your accounting year.

Step 7 — Confirmation. Review everything, submit, and receive your EIN immediately on screen. Print or save the confirmation.

The entire process takes 5-10 minutes. You can only complete one EIN application per responsible party per day through the online system.

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.

When You Need a New EIN vs. Keeping Your Existing One

Some business changes require a new EIN; others do not. This trips up a lot of business owners:

Business Change	New EIN Required?
Sole proprietor incorporates or forms LLC	Yes
Sole proprietor changes name	No
LLC adds or removes members	No
LLC elects S-Corp status	No (use existing EIN)
Partnership adds or removes partners (existing partnership continues)	No
Corporation changes name	No
Corporation merges with another corporation	Depends — new entity needs new EIN
Bankruptcy filing	Yes (for corporation); No (for sole proprietor)
Purchase an existing business	Yes (new owner, new EIN)
Inherited a business	Yes

If in doubt, call the IRS Business & Specialty Tax Line at (800) 829-4933.

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.

What to Do Immediately After Getting Your EIN

1. Save or print the CP 575 confirmation letter — store it with your other important business documents
2. Open a business bank account — bring the EIN confirmation, Articles of Organization (for LLCs), and photo ID
3. Register for state taxes — see below for details
4. Update your W-9 form — use the EIN instead of your SSN going forward
5. Set up accounting software — configure with your EIN for proper tax reporting

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.

Sales Tax Overview by State

State	State Sales Tax Rate	Construction Labor Taxable?	Professional Services Taxable?	Notes
California	7.25% (+ local up to 10.75%)	Generally no	No	Complex use tax rules apply
Texas	6.25% (+ local up to 8.25%)	No	Some (data processing, security, etc.)	Most services not taxable
Florida	6.0% (+ local up to 8.5%)	No	Some (commercial cleaning, pest control)	Commercial rentals are taxable
New York	4.0% (+ local up to 8.875%)	No	No	Clothing under $110 exempt in NYC
Illinois	6.25% (+ local up to 11%)	No	No	Use tax on out-of-state purchases
Ohio	5.75% (+ local up to 8.0%)	No	Some (lawn care, landscaping)	Many service exemptions
Pennsylvania	6.0% (+ local up to 8%)	No	No	Food and clothing exempt
Washington	6.5% (+ local up to 10.4%)	Yes (retail sales tax on construction)	No state income tax	B&O tax applies instead
Delaware	None	N/A	N/A	No sales tax
Oregon	None	N/A	N/A	No sales tax

This is a simplified overview. Sales tax rules are among the most complex in state taxation. When in doubt, consult your state's department of revenue or work with a CPA who specializes in your industry and state.

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.

SUTA rates vary by state and by employer. New employers typically pay a default rate until they establish an experience rating. Typical ranges:

State	New Employer SUTA Rate	Taxable Wage Base	Notes
California	3.4%	$7,000	Plus Employment Training Tax of 0.1%
Texas	2.7%	$9,000	Rates can range from 0.25% to 6.25%
Florida	2.7%	$7,000	Experience rates range from 0.10% to 5.40%
New York	4.025% (approx.)	$12,500	Complex rate schedule
Illinois	3.525%	$13,590	Includes fund building surcharge
Ohio	2.7%	$9,000	Experience rates range from 0.3% to 9.2%

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.

Workers' compensation premiums vary dramatically by industry and state. Here are typical annual costs per $100 of payroll:

Industry	Typical Rate per $100 of Payroll
Office/Clerical	$0.20 - $0.50
Retail	$0.50 - $2.00
Landscaping	$3.00 - $8.00
Carpentry/General Construction	$5.00 - $15.00
Roofing	$10.00 - $30.00
Electrical Work	$3.00 - $8.00
Plumbing	$3.00 - $7.00

For a roofing company with $300,000 in annual payroll, workers' compensation insurance could cost $30,000-$90,000 per year. For an office-based consulting firm with the same payroll, it might cost $600-$1,500. This is a major cost that needs to be factored into your business plan.

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

Contractor Licensing Requirements by State

Since many readers are in the trades, here is a deeper look at contractor licensing:

State	State License Required?	Licensing Authority	Exam Required?	Bond/Insurance Required?
California	Yes (projects over $500)	CSLB	Yes	Yes ($25,000 bond)
Texas	No state license (some trades licensed)	TDLR for specific trades	Varies	Varies by trade
Florida	Yes	DBPR/Construction Industry Board	Yes	Yes (varies by type)
New York	No state license (NYC has its own)	NYC DOB for NYC work	Yes (NYC)	Yes (NYC)
Arizona	Yes	ROC	Yes	Yes (bond required)
Ohio	No state license (local licenses)	Local building departments	Varies	Varies
Illinois	No state license (Chicago requires one)	Local jurisdictions	Varies	Varies
Georgia	No state license (some trades licensed)	Secretary of State	Varies	Varies

In states without a state-level contractor license, local jurisdictions (cities, counties) often have their own licensing requirements. Always check local rules.

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

Complete New Business Registration Checklist

Here is everything a typical new business needs to handle, in order:

Step	What to Do	Cost	Timeline
1	Form your entity (LLC, Corp, etc.)	$50 - $500	1-7 days (online filing)
2	Get your EIN from the IRS	$0	Immediate (online)
3	Open a business bank account	$0 - $25/month	1-2 days
4	Register for state income tax withholding	$0	1-5 days (online)
5	Get a sales tax permit (if applicable)	$0	1-10 days
6	Register for state unemployment insurance	$0	1-5 days
7	Get workers' compensation insurance	Varies by industry	1-7 days
8	Get a city/county business license	$25 - $500	1-14 days
9	Get professional/trade licenses	$50 - $1,000+	Days to months (may require exam)
10	Get general liability insurance	$400 - $3,000/year	1-3 days
11	Set up accounting software and bookkeeping	$0 - $50/month	1 day
12	File DBA (if using a trade name)	$10 - $100	1-14 days

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:

1. 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.
2. Your state's Secretary of State website — lists state-level requirements.
3. Your state's department of revenue — for tax registrations.
4. Your city and county websites — for local business licenses.
5. 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.

Annual Renewal Calendar Template

Month	Common Renewals
January	Annual business license renewal (many cities); state LLC annual report (varies)
March	S-Corp tax return due (March 15); partnership tax return due (March 15)
April	Individual tax return due (April 15); C-Corp tax return due (April 15)
June	Q2 estimated tax payment (June 15)
July	Mid-year insurance policy renewals
September	Q3 estimated tax payment (September 15)
December	Year-end bookkeeping preparation; review registrations for upcoming renewals

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.
• Applying for an EIN before forming your entity. If you plan to form an LLC, form it first, then apply for the EIN. The EIN application asks for your entity type and formation date. Getting this wrong creates mismatches that are tedious to fix.
• Not separating state registrations from entity formation. Forming an LLC with the Secretary of State does not register you for sales tax, withholding tax, or unemployment insurance. Those are separate registrations with different agencies.
• Assuming one license covers everything. A general business license does not replace a contractor's license, a sales tax permit, or a professional license. You may need multiple registrations and licenses operating simultaneously.

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.