Business Entities and Considerations · Business entities
Employer identification number
tax year · reviewed 2026-08-21 · Draft for I. Ohu review
The employer identification number is administrative, and that is why it produces errors. It is not a tax status, not an election, and not evidence of anything about how an entity is classified — it is a label the Service attaches to a filer. Clients treat it as though it carried meaning, and the practitioner’s job is usually to talk them out of an unnecessary application, or into a necessary one they had not thought about.
The rule
The statutory requirement. any person required to make a return, statement or other document must include the identifying number prescribed for securing proper identification, must furnish that number to another person required to show it, and must furnish the number of another person where required (IRC § 6109(a)(1) to (3))TY2026
Which number each person uses. an individual required to furnish a taxpayer identifying number uses a social security number, or an individual taxpayer identification number if not eligible for one; any person other than an individual — corporations, partnerships, nonprofit associations, trusts, estates and similar nonindividual persons — uses an employer identification number (Reg. § 301.6109-1(a)(1)(ii)(A) to (C))TY2026
Sole proprietors and employers. an individual, whether U.S. or foreign, who is an employer or who is engaged in a trade or business as a sole proprietor should use an employer identification number as required by returns, statements or other documents and their instructions (Reg. § 301.6109-1(a)(1)(ii)(D))TY2026
That paragraph is worth reading twice, because it is the answer to the most common misconception. A sole proprietor is an individual, and an individual normally uses a social security number — but a sole proprietor who is an employer, or who is engaged in a trade or business, uses an employer identification number where the return or form calls for one (Reg. § 301.6109-1(a)(1)(ii)(D)). Sole proprietors are not merely permitted to have one; the regulation says they should use one.
Applying. any person required to furnish an employer identification number must apply for one, if not done previously, on Form SS-4, far enough in advance of the first required use to permit issuance in time for compliance (Reg. § 301.6109-1(d)(2)(i))TY2026
Who may be named. a responsible party is someone who owns, controls or exercises effective control over the entity and directly or indirectly manages its funds and assets; the application must name one and give their taxpayer identification number, and the responsible party must be a person rather than an entity except for government entities. It is usually the principal officer of a corporation or tax-exempt organisation, a general partner of a partnership, the grantor, owner or trustor of a trust, or the fiduciary of an estateTY2026
Who may not. a nominee — someone given limited authority to act during formation, with little or no control over the entity assets — cannot apply for an employer identification number and should not be listed on Form SS-4; where a nominee is used for state formation the responsible party must be identified before the application is madeTY2026
The online application. the online application is available only to a domestic organisation formed in the United States or its territories whose principal place of business is there, applied for by the responsible party in control of the entity or an authorised representative holding the responsible party social security number or individual taxpayer identification number; an applicant whose principal place of business is outside the United States must apply by phone, fax or mailTY2026
The daily limit. an applicant may obtain only 1 employer identification number per responsible party per day; the online application must be completed in one session and expires after 15 minutes of inactivityTY2026
Keeping the application current. a person issued an employer identification number must provide the Service with any updated application information in the manner and frequency required by forms, instructions or other guidance — a requirement applying to every holder of an employer identification number on or after 1 January 2014 (Reg. § 301.6109-1(d)(2)(ii))TY2026
When a sole proprietor needs a new one. a sole proprietor needs a new employer identification number on incorporating, on forming a partnership, or on declaring bankruptcy, and does not need one on changing the business name or location or on owning multiple businessesTY2026
When a corporation does. a corporation needs a new employer identification number on receiving a new charter from the secretary of state, on becoming a subsidiary of another corporation, on changing to a partnership or sole proprietorship, or on merging to create a new corporation — and does not need one on changing name or location, declaring bankruptcy, being a division, surviving a merger, electing S corporation status, reorganising to change only identity or location, or converting at State level without changing structureTY2026
When a partnership does. a partnership needs a new employer identification number on incorporating, on one partner taking over to operate as a sole proprietor, or on ending a partnership and beginning a new one — and does not need one on changing name or location, declaring bankruptcy, or undergoing a change in ownership that does not terminate the partnershipTY2026
When an LLC does. an LLC needs a new employer identification number on terminating and forming a new corporation or partnership, or where a single-member LLC must file excise or employment taxes — and does not need one on changing name or location, reporting as a branch or division of another entity with no employees and no excise tax, converting a partnership to an LLC classified as a partnership, or changing its tax election to a corporation or S corporationTY2026
The one case where a new partnership keeps an old number. a new partnership formed as a result of the termination of a partnership under IRC § 708(b)(1)(B) retains the employer identification number of the terminated partnership (Reg. § 301.6109-1(d)(2)(iii))TY2026
Current figures
| Item | Rule | Authority |
|---|---|---|
| Which number | an individual required to furnish a taxpayer identifying number uses a social security number, or an individual taxpayer identification number if not eligible for one; any person other than an individual — corporations, partnerships, nonprofit associations, trusts, estates and similar nonindividual persons — uses an employer identification number (Reg. § 301.6109-1(a)(1)(ii)(A) to (C))TY2026 | Reg. § 301.6109-1(a)(1)(ii) |
| Sole proprietors | an individual, whether U.S. or foreign, who is an employer or who is engaged in a trade or business as a sole proprietor should use an employer identification number as required by returns, statements or other documents and their instructions (Reg. § 301.6109-1(a)(1)(ii)(D))TY2026 | Reg. § 301.6109-1(a)(1)(ii)(D) |
| Daily limit | an applicant may obtain only 1 employer identification number per responsible party per day; the online application must be completed in one session and expires after 15 minutes of inactivityTY2026 | IRS, Get an EIN |
| New number — sole proprietor | a sole proprietor needs a new employer identification number on incorporating, on forming a partnership, or on declaring bankruptcy, and does not need one on changing the business name or location or on owning multiple businessesTY2026 | IRS, Do you need a new EIN? |
| New number — corporation | a corporation needs a new employer identification number on receiving a new charter from the secretary of state, on becoming a subsidiary of another corporation, on changing to a partnership or sole proprietorship, or on merging to create a new corporation — and does not need one on changing name or location, declaring bankruptcy, being a division, surviving a merger, electing S corporation status, reorganising to change only identity or location, or converting at State level without changing structureTY2026 | IRS, Do you need a new EIN? |
| New number — partnership | a partnership needs a new employer identification number on incorporating, on one partner taking over to operate as a sole proprietor, or on ending a partnership and beginning a new one — and does not need one on changing name or location, declaring bankruptcy, or undergoing a change in ownership that does not terminate the partnershipTY2026 | IRS, Do you need a new EIN? |
| New number — LLC | an LLC needs a new employer identification number on terminating and forming a new corporation or partnership, or where a single-member LLC must file excise or employment taxes — and does not need one on changing name or location, reporting as a branch or division of another entity with no employees and no excise tax, converting a partnership to an LLC classified as a partnership, or changing its tax election to a corporation or S corporationTY2026 | IRS, Do you need a new EIN? |
How it works in practice
The organising idea across all four lists is that a new number follows a new entity, not a new fact about an existing one. Renaming a business does not create an entity, and nor does moving it, opening another location, or going bankrupt — bankruptcy changes who controls the entity’s assets but not what the entity is, which is why it appears on the “no new number” side for corporations and partnerships. What does create a new entity is a change of structure: a sole proprietor who incorporates, a partnership that incorporates, a corporation that becomes a partnership.
Bankruptcy is the exception that proves the point and it is the item most often got wrong, because it appears on both sides depending on the entity. A sole proprietor who declares bankruptcy does need a new number; a corporation or partnership does not. The reason is that a sole proprietorship has no legal existence apart from its owner, so the bankruptcy estate is a genuinely different taxpayer, whereas a corporation in bankruptcy is the same corporation.
The corporate list contains a pair of items that read like a contradiction until you separate federal classification from State existence. A corporation that chooses to be taxed as an S corporation keeps its number: nothing has been formed, an election has been made. But a corporation that gets a new charter from the secretary of state needs a new one, even if the business is identical, because the State has created a different legal person. The same distinction runs through the LLC list: changing the tax election to corporation or S corporation does not require a new number, while terminating the LLC and forming a corporation does.
The single-member LLC entry deserves particular care. A disregarded LLC with no employees and no excise tax liability can operate on its owner’s number; the moment it must file employment or excise taxes it needs its own, because those returns are filed by the entity rather than by the owner. That follows from the classification rules rather than from anything in the EIN guidance — a disregarded entity is treated as a corporation for subtitle C — and it is the practical reason so many single-member LLCs end up with a number they did not initially need.
Naming the responsible party is a real compliance step and not a formality. The person named must own, control, or exercise effective control over the entity, must be an individual rather than an entity except for government entities, and their own taxpayer identification number goes on the form. A nominee — a formation agent, a registered-agent service, a lawyer holding an interest temporarily — cannot be named. Where the responsible party changes afterwards, the duty to keep the application information current is what obliges the entity to report it (Reg. § 301.6109-1(d)(2)(ii)).
The one-per-day limit is per responsible party, not per applicant or per adviser. A practitioner forming five entities for the same client on the same day will get one number and be refused the rest, which is a scheduling problem worth knowing about before the closing date rather than on it.
Scenarios
The rename that needed nothing
Odalys has operated a landscaping business as a sole proprietor since 2019 under the name Verde Yards, with an employer identification number obtained when she took on her first employee. In 2026 she rebrands as Odalys Landscape Co., registers the new trading name with her county, moves the yard to a site two towns over, and opens a second crew base across the State line.
She needs no new number for any of it. On the IRS guidance a sole proprietor does not need a new employer identification number on changing the business name or location, and additional locations do not change the analysis — she is the same taxpayer conducting the same proprietorship. What she should do is notify the Service of the name and address change so that her account information stays current, which is the point of the obligation in Reg. § 301.6109-1(d)(2)(ii). If she later incorporates the business, that is when the new number is required.
The five closings in one afternoon
A practitioner is forming five single-purpose LLCs for one client, each to hold a separate property, all closing on the same Friday. Each will elect association status and each will have employees, so each needs its own employer identification number. The client is the responsible party for all five. The practitioner plans to obtain all five numbers on Thursday afternoon.
Only one will issue. The IRS limits applications to one employer identification number per responsible party per day, so the remaining four will be refused however the applications are submitted. The constraint is on the responsible party rather than on the person filling in the form, so the practitioner cannot solve it by applying from a different account. The workable answers are to spread the applications across five business days, or — if the entities genuinely have different controlling persons — to name the correct responsible party for each, which is a matter of fact rather than a matter of convenience.
The single-member LLC that acquired an obligation
Teodoro formed a single-member LLC in 2023 to hold a consulting practice. It made no election, so it is disregarded, and he reports on Schedule C using his social security number. He has no employees. In March 2026 he hires an assistant.
He now needs an employer identification number for the LLC. On the IRS guidance a single-member LLC that has to file excise or employment taxes needs its own number, and the reason lies in Reg. § 301.7701-2(c)(2)(iv)(B): a disregarded entity is treated as a corporation for the subtitle C taxes, so it is the employer, and the Forms 941 and W-2 are filed in the LLC's name and number rather than Teodoro's. The income tax position is unchanged — Schedule C continues — which is precisely the combination that confuses clients. One entity, two identifying numbers, both correct.
The partnership that dissolved and the one that did not
Two engineering partnerships each undergo a change in 2026. In the first, one of three partners buys out the other two and continues the business as a sole proprietor. In the second, one of three partners sells their entire interest to a new incoming partner, and the firm continues with three partners as before.
The first needs a new number. A partnership whose business is taken over by one partner operating as a sole proprietor is on the IRS list of changes requiring a new employer identification number, and the reason is that the partnership has ceased to exist — there is one owner where there were three, and a proprietorship is a different taxpayer. The second does not: a change in ownership that does not terminate the partnership is expressly on the "no new number" side, and the firm keeps filing Form 1065 under the number it has always had.
- A name change never requires a new number. Nor does a change of location, nor additional locations, for any entity type.
- Bankruptcy cuts both ways. A sole proprietor needs a new number; a corporation or partnership does not.
- An S election does not require a new number. Neither does an LLC changing its tax election. A new State charter does.
- Sole proprietors are not merely eligible. Reg. § 301.6109-1(a)(1)(ii)(D) says an individual who is an employer or in a trade or business should use an employer identification number.
- The responsible party must be a person. Not a parent company, and never a nominee or formation agent.
- The daily limit is per responsible party. Changing who submits the application does not defeat it.
- A partnership terminating under IRC § 708(b)(1)(B) keeps its number. The new partnership retains the terminated one's, which is the reverse of the general pattern.
How this has changed
The requirement to keep application information current is comparatively recent, applying to every holder of an employer identification number on or after 1 January 2014. Before it there was no continuing obligation attached to the number at all — an entity applied once and the Service’s record aged with it. The consequence in practice is that the responsible party recorded for many older entities is a person who has long since left, and correcting it is a compliance obligation rather than a housekeeping option.
The rule for partnerships terminating under IRC § 708(b)(1)(B) applies to terminations occurring on or after 9 May 1997, and it survives as a curiosity: the provision that produced those terminations — a sale or exchange of half or more of the interests in capital and profits within twelve months — was repealed for partnership taxable years beginning after 2017, so the technical termination it addressed can no longer occur. The regulation text remains, and material describing technical terminations as a live event is describing repealed law.
Applications by international applicants and the online tool’s availability windows change from time to time; the tool is limited to domestic organisations with a U.S. principal place of business, and everyone else applies by phone, fax or mail. Anything more specific than that is operational rather than legal and should be checked against the current IRS page rather than remembered.
Exam focus
Nearly every question on this topic is a “does this require a new EIN” question, offered as a list of four changes with one that differs from the rest. Learn the four IRS lists as pairs of columns rather than as prose, and note where the same event sits differently for different entity types — bankruptcy is the one that does this most often.
Two further shapes recur. First, a question about who may be named on Form SS-4, where the answer turns on the responsible party being an individual with actual control and on nominees being excluded. Second, a question about whether a sole proprietor may or must have a number, where the trap answer is that a sole proprietor uses only a social security number. Read the option carefully: a sole proprietor with no employees may operate on a social security number, but the regulation directs an individual who is an employer or in a trade or business to use an employer identification number, and the option asserting ineligibility is always wrong.
Check yourself
1. A corporation changes its name, relocates its head office to another State, and elects S corporation status, all in the same year. How many new employer identification numbers does it need?
Answer: none. On the IRS guidance a corporation does not need a new number on changing its name or location or on choosing to be taxed as an S corporation. Each of the three is a change to an existing entity rather than the creation of a new one.
2. A sole proprietor with two employees files for bankruptcy. Does the business need a new employer identification number?
Answer: yes. Declaring bankruptcy is on the IRS list of events for which a sole proprietor needs a new number, because the bankruptcy estate is a separate taxpayer from the individual. The same event does not require a new number for a corporation or a partnership, which continue to exist as the same legal persons.
3. A practitioner needs employer identification numbers for three trusts, all with the same grantor, on the same day. What is the constraint?
Answer: one per day. The limit is one employer identification number per responsible party per day, and for a trust the responsible party is the grantor, owner or trustor. Because the grantor is the same person for all three, only one application will succeed that day; the others must be made on subsequent days.
4. A formation agent incorporates a company on a client’s behalf and holds the sole share until the client’s paperwork is complete. May the agent be named as responsible party on Form SS-4?
Answer: no. That is a nominee — someone given limited authority during formation with little or no control over the entity’s assets — and the IRS guidance states that nominees cannot apply for an employer identification number and should not be listed on Form SS-4. The responsible party must be identified before the application is made.
5. Three partners sell most of the interests in their partnership’s capital and profits to incoming partners over a nine-month period in 2026, and the partnership continues in business. Does it need a new number?
Answer: no, on two independent grounds. A change in ownership that does not terminate the partnership is expressly on the “no new number” side of the IRS guidance. And the technical termination that such a transfer once triggered under IRC § 708(b)(1)(B) was repealed for partnership years beginning after 2017, so nothing terminates here at all.
Change log
- Initial draft. Sets out the IRC § 6109(a) requirement to supply identifying numbers, the Reg. § 301.6109-1(a)(1)(ii) rules on which number each kind of person uses including the sole proprietor rule at (D), the Form SS-4 application and the Reg. § 301.6109-1(d)(2)(ii) duty to keep application information current, the Reg. § 301.6109-1(d)(2)(iii) rule that a partnership formed on an IRC § 708(b)(1)(B) termination keeps the old number, and the IRS guidance on responsible parties, nominees, the one-per-day limit and when each kind of entity needs a new number.