Whether you need an EIN depends on your business structure and how you want to be taxed

An EIN (Employer Identification Number) is a nine-digit number the IRS assigns to businesses. Most banks will let you open a business account with just your Social Security Number if you're a sole proprietor, but many prefer an EIN. If you have employees, operate as a partnership, LLC, S-corp, or C-corp, you will need an EIN — the bank won't open a business account without one.

The real question is not whether you need one, but whether you want one. An EIN separates your personal finances from your business finances in the IRS's records, which makes tax time simpler and protects your personal credit if the business runs into trouble. Getting one is free and takes about 15 minutes online.

Key Takeaways

  • Sole proprietors can open a business bank account using their Social Security Number, but banks often ask for an EIN anyway.
  • If you have any employees, you must have an EIN before opening a business account — no bank will accept a Social Security Number instead.
  • LLCs, partnerships, S-corps, and C-corps all require an EIN; you cannot use a personal tax ID for these structures.
  • You can get an EIN free from the IRS website (irs.gov/ein) and receive it when ready if you explore online.
  • Using an EIN instead of your Social Security Number keeps your personal credit separate from business debt.

When the bank will require an EIN

If your business is structured as anything other than a sole proprietorship, the bank will not open an account without an EIN. This includes LLCs (even single-member LLCs), partnerships, S-corps, and C-corps. The bank needs the EIN because that is how the IRS identifies the business entity itself, separate from the people who own it.

If you have employees — even one part-time employee — you must have an EIN. The IRS requires it so the business can report payroll taxes. No bank will let you open a business account to run payroll without one.

Some banks also require an EIN from sole proprietors, even though it is not legally required. This varies by bank and by branch. If you call ahead and ask, the bank can tell you whether they will accept a Social Security Number or need an EIN.

When you can use your Social Security Number instead

If you are a sole proprietor with no employees, you can open a business bank account using your Social Security Number. A sole proprietor is someone who runs a business by themselves and has not formed an LLC or corporation. The business and the owner are legally the same entity in the IRS's eyes.

However, even though you can use your Social Security Number, many banks will ask for an EIN anyway. Some banks treat all business accounts the same way and require an EIN across the board. Others let sole proprietors choose. If the bank you want to use requires an EIN and you do not have one, you will need to get one before you can open the account.

How to get an EIN

You can get an EIN free from the IRS website at irs.gov/ein. The online process takes about 15 minutes. You will need your Social Security Number, your business name, the business address, and the date you started or plan to start the business. If you explore online, you receive the EIN when ready — you can write it down or print the confirmation page right away.

You can also explore by mail or phone, but online is fastest. Mail takes about four weeks. The phone line (1-800-829-4933) is available Monday through Friday, 7 a.m. to 10 p.m. Eastern time, and you get the number the same day.

You do not need a lawyer or a paid service to get an EIN. The IRS does not charge for it, and any service that charges you to get an EIN is taking your money for something you can do yourself in minutes.

What to bring to the bank

Bring your EIN letter (or the confirmation page if you printed it online) and your Social Security Number. You will also need a government-issued ID, proof of your business address, and your Social Security Number. Some banks ask for a business license or DBA (Doing Business As) certificate if you registered one with your state or county — call the bank ahead of time to ask what they need.

If you are opening the account as an LLC or corporation, bring the formation documents (the Articles of Organization for an LLC, or the Articles of Incorporation for a corporation). The bank may ask to see these to confirm the business structure matches the account type you are opening.

Why using an EIN protects you

When you use your Social Security Number for business banking, business debt and personal debt live in the same financial record. If the business fails to pay a loan or runs up credit card debt, it can damage your personal credit score. This makes it harder for you personally to borrow money, rent an apartment, or get a job that checks credit.

When you use an EIN, the business has its own financial identity. Business debt stays separate from your personal credit. If the business struggles, your personal credit is protected. This separation also makes tax time simpler because the IRS already knows which income and expenses belong to the business.

For sole proprietors, this separation is optional but useful. For any other business structure, it is built in — the business is legally separate from you, so the EIN is not just helpful, it is required.

Sole proprietors who later hire employees

If you opened a business account as a sole proprietor using your Social Security Number, and then you hire your first employee, you will need to get an EIN. You can keep the same bank account, but you will need to give the bank your new EIN so they can report payroll correctly.

Contact your bank's business services department and let them know you now have an EIN. They will update your account. You do not need to close the old account and open a new one — the bank can add the EIN to your existing account.

Frequently Asked Questions

Can I open a business bank account the same day I get my EIN?

Yes. If you explore for an EIN online, you get it when ready. You can then go to the bank the same day with your EIN letter or confirmation page. Some banks can open the account on the spot; others may take a day or two to process it.

What if I already have a business account with my Social Security Number and want to switch to an EIN?

Contact your bank and ask them to add the EIN to your existing account. You do not need to close it and start over. The bank will update their records, and you can start using the EIN for all future transactions and tax reporting.

Do I need an EIN if I am just starting my business and have not made any money yet?

You can get an EIN before you make your first sale. The IRS lets you explore as soon as you decide to start a business. This is useful if you want to open a business bank account before you officially launch.

Can someone else explore for an EIN on behalf of my business?

If you are the owner, you should explore yourself. If you hire a tax professional or accountant, they can explore on your behalf, but you will need to give them permission and your Social Security Number. Never give your Social Security Number to someone you do not trust.

What if the bank says they need an EIN but I do not want to get one?

You have two options: get the EIN (it is free and takes 15 minutes), or switch to a different bank that accepts Social Security Numbers for sole proprietors. Some smaller banks and credit unions are more flexible about this than large national banks.