Can I Use the Same EIN for Two Businesses?

An Employer Identification Number (EIN) is a unique nine-digit number the Internal Revenue Service (IRS) assigns to a business for tax identification, similar to a Social Security number for an individual. Each distinct legal business entity needs its own EIN. As a rule, you cannot use the same EIN for two different businesses if they are legally structured as separate entities. This identifier is permanent for the life of the business and is used for filing federal tax returns, reporting payroll taxes, and opening a business bank account.

When a New EIN is Required

A new EIN is required whenever a business’s ownership or legal structure changes. When these changes occur, the IRS considers the original entity to have terminated and a new one to have been formed, even if the business operations seem unchanged. This distinction is important to tax law, as different legal structures have different reporting requirements. The new legal entity cannot operate under the tax identity of the former one.

Common events that require a new EIN include:

• A sole proprietor incorporates or forms a partnership, creating a new legal entity separate from the owner.
• A new corporation is created following a statutory merger or receives a new charter from the state.
• A business changes its structure, such as a corporation becoming a partnership or a sole proprietorship.
• A new multi-member Limited Liability Company (LLC) is formed.
• A single-member LLC, which may not have needed an EIN, chooses to be taxed as a corporation or S corporation.
• An existing partnership is terminated and a new one is formed.

Special Considerations for Business Types

Sole Proprietorships

An individual can operate multiple businesses as a sole proprietor without needing a separate EIN for each one. The IRS views all these business activities as extensions of the single taxpayer. For example, a person could run a freelance writing business and a separate craft business as sole proprietorships and use a single EIN for tax reporting needs for both ventures, such as hiring employees.

DBAs (“Doing Business As”)

A “Doing Business As” (DBA) is a trade name, not a separate legal entity, and does not receive its own EIN. It uses the EIN of the underlying business structure. For instance, if an LLC named “123 Business Solutions LLC” operates under the DBA “Quick Tax Prep,” all tax filings use the EIN assigned to the LLC. The DBA is a name used for marketing purposes.

Parent Companies and Subsidiaries

A subsidiary is a legal entity separate and distinct from its parent company, even though it is owned by the parent. Because it is its own legal entity, each subsidiary must obtain a unique EIN. A subsidiary cannot use the parent company’s EIN for tax reporting, hiring employees, or other purposes requiring a federal tax ID number.

Information Needed to Apply for an EIN

Before beginning the application process, you must gather specific information for IRS Form SS-4, Application for Employer Identification Number. A central piece of information is the name and Taxpayer Identification Number (SSN or ITIN) of the “responsible party.” The IRS defines the responsible party as the individual who ultimately owns or controls the entity.

You will also need to provide the following details:

• The exact legal name of the business entity and its mailing address.
• The type of entity, such as a corporation, partnership, or LLC.
• The reason for applying, such as starting a new business or hiring employees.
• The closing month of your accounting year, which is typically December for most businesses.
• An estimate of the maximum number of employees you expect to hire in the next 12 months.

The EIN Application Process

Once you have gathered the necessary information, you can apply for an EIN. The IRS offers several methods, with the online application being the fastest approach. Using the IRS’s online portal, the system will validate the information in real-time. The application is an interactive session that must be completed at once and is only available Monday through Friday, from 7 a.m. to 10 p.m. Eastern Time. The IRS also limits applications to one EIN per responsible party per day. Upon successful validation, an EIN is issued immediately.

For those who cannot use the online system, applications can be submitted by fax or mail. To do this, you must complete a physical copy of Form SS-4 and send it to the appropriate IRS service center. If you apply by fax and include a return fax number, you can expect a response in about one week. Submitting by mail is the slowest method, with processing times taking four to five weeks.