Just as individuals have Social Security numbers that identify them for tax purposes, businesses have nine-digit Federal Tax ID Numbers, also known as Employer Identification Numbers, or EINs. Many, but not all, businesses must obtain an EIN to make federal tax payments and file returns.
But what if you conduct business under a trade name, or DBA? Maybe you’re a sole proprietor named Joseph Jones who uses the DBA “Joe’s Taco Truck.” Or maybe your business is incorporated as “JT Truck, Inc.” and you operate under two DBAs: “Joe’s Taco Truck” and “Tacos Unlimited.”
Do you need an EIN? And if so, should you get one for the official name or for the DBA, or both?
EIN for a DBA?
To understand the relationship between EINs and DBAs, it’s helpful to think of a DBA in the same way you think of a person’s nickname. If your name is Joseph Jones, you may be called Joey or JJ, but you will only have one Social Security card, and the name on it will be the one your parents gave you when you were born, Joseph Jones.
Similarly, you’ll apply for and receive a federal taxpayer identification number under your business’s formal name. In the case of a sole proprietorship, that’s the full legal name of the owner. In the case of a limited partnership, corporation or limited liability company, it’s the name listed on the formation documents you filed with the state—in our example, it’s “JT Truck, Inc.” That’s because an EIN is used for tax purposes, and your business is the entity that pays taxes. Your DBAs are just your business nicknames, and therefore, you won’t have a separate EIN for a DBA.
Not all businesses need an EIN. Whether you’re required to have one depends on how your business is organized and what kind of taxes it pays.
Do I Need an EIN for My Business?
If your business is a corporation or a partnership, the IRS requires you to have an EIN. Limited liability companies may need an EIN, depending on how they are taxed. LLCs don’t have their own tax classification but are taxed as though they were other types of entities. If your LLC is taxed as a partnership or a corporation, it must have an EIN.
In addition, businesses must get Employer Identification Numbers if they have employees, pay employment or excise taxes, have a Keogh plan, or meet any of several other criteria listed on the IRS website.
Sole proprietors and single member LLCs that do not have employees and do not pay excise taxes are not required to obtain an EIN. They can use their Social Security numbers instead. However, many business owners find that they need an EIN to open a bank account, obtain a credit card, obtain business licenses, or pay state or local taxes. And others choose to get an EIN to avoid using their personal Social Security numbers for business matters.
Get an EIN for a DBA
To get an EIN, you must submit a form to the Internal Revenue Service. On the form, you will provide information about your business, including the way it is structured, the number of employees and your principal business activities.
There are several ways to apply for an EIN. The fastest is the free IRS online application. You’ll receive your EIN immediately after you complete and submit the form. Alternately, you can fill out form SS-4 and fax or mail it to the IRS. If you apply by fax, you’ll receive your EIN by fax within four business days. If you apply by mail, it can take four weeks. International applicants can only apply for an EIN by telephone or by mail.
Whether you do business under your formal business name or as a DBA, the rules for obtaining a Federal Employer Identification Number are the same. Applying is free and easy. And you’ll only need one number—even if you have more than one DBA.
If you’d like help obtaining your EIN, LegalCleanup.com can do it for you.
