An EIN is an Employer Identification Number, essentially the equivalent of a Social Security Number but for business entities rather than individuals. Just as your SSN is needed on your personal tax returns, your EIN is needed for business tax returns.
You are always required to have an EIN if you hire or plan to hire employees, or if your business structure is anything other than a sole proprietorship.
Why would I need an EIN?
Banks usually require an EIN to open a business bank account unless you are the sole proprietor. For a sole proprietorship with no employees, an EIN is not required, but many business owners prefer to obtain an EIN anyway. One advantage of having an EIN is that you have a unique identifying number to provide to entities such as banks or vendors. In the event you own a sole proprietorship and do not have an EIN, your business income will be reported directly on your personal tax return and tied to your Social Security Number.
You can get an EIN the same day if the IRS can verify your Social Security Number. Otherwise, you will need to apply by mail and the IRS processing time is about four weeks.